It was one heck of a week filled with upside and downside action, and none more than in my favorite credit card processing company Mastercard. Recall that we have been on the case with this stock as early as the first week of 2013 when I mentioned it in my post here when it first crossed 500. I've been trading in and out of it in small lots, usually about 10 share blocks. As of earnings which came out this past Thursday, I was long 20 shares in my cash account and 30 in my retirement account.
Anyway, with the stock at about 600 back on 7/30, I tried to get filled on an Iron Condor similar to what I described in last week's post here. With the Market Maker move at about $20, I was trying to sell the 575/580 put credit spread and the 620/625 call credit spread. For whatever reason, I was just not getting filled so I just went home and called it a day.
Come Wednesday morning, earnings are out and at the stock is trading at about 625 in the pre-market. And much to my surprise, I found out I got filled on the 620/625 call credit spread at 0.90! Just when I thought I had seen it all, here I am filled on a spread that I didn't think I had - and I wake up to find myself at a max loss situation!
Well I learned from experience to keep my cool in situations like this, so I just sat on my hands and watched the stock open. It got to as high as about 626 then slowly started pulling back. By about 11AM, the selling got severe on news that a court had ruled against the US Federal Reserve on its ruling regarding Debit Card fees. That sent the stock into a complete free-fall, trading down to as low as 567 before staging a dramatic reversal and closed the day at 610. Someone in the Simpler Options Trading room followed a comment I make to get long the stock at about 580 and made some serious cash on the quick move back up. I wasn't that fortunate, but was able to cover my 620/625 call credit spread at 0.10 for a profit of 0.80 or about 80 bucks. Not bad considering I was looking at a $400 loss a few minutes earlier.
And as if all that were not enough, the next days the stock roared out to new all time highs and traded up as high as about 645. Had I not covered my CCS on the sell-off, I would have been looking at a max loss situation once again! And I held onto the stock the entire time and sold half of my position up in the 645 area thinking this buying was just of a lot of irrational exuberance.
As for the rest of the week, I had a pretty good time selling spreads into earnings and made a little bit of money (less than $100) every day Monday through Thursday. Come Friday, with LNKD shares at 210, I put on the 185/190, 230/235 condor for a credit of 1.85. At the time this seemed like a no-brainer trade and I figured I had a pretty good chance of ending the week taking home the entire $185.
Well it didn't turn out that way and LNKD instead reported stellar earnings that exceeded everyone's wildest expectations. The stock trade as high as 237 and I ended up buying back the 230/235 Call Credit Spread at 4.5 for a loss of $270. That wiped out most of the profits in my TradeStation account for the week.
Over on the E*Trade side, I had a stellar week with nice gains in the broad market ETF's and solid gains in CBOE, CELG, DNKN and the previously mentioned MA. This pushed my net worth out to new all-time highs. But don't confuse brains with a bull market as the saying goes.
That's all for now, enjoy your weekend and the fruits of your labors.
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