It was a wild and very active week and overall not a positive one with all of my accounts giving back some ground from recent highs. My TradeStation account took a particular bruising. So much happened that I need to go back on a trade-by-trade basis and see what worked and what did not. Much of the action was centered around earnings, so let's get to it.
Last Friday, I went out long a small amount of Biogen Idec stock (BIIB) on a Friday close into new all-time high territory in the low 250's. I didn't realize that earnings were due Monday, so that was my first mistake. In any case, the stock opened up nicely on a good earnings report and I was up about 10 points early on and the stock trade as high as 262 early Monday.
BIIB Nov 16 245 Call
Later in the morning the stock pulled back and John Carter from the Simpler Options room put on a bullish trade, and I followed, buying the November Monthly 245 call at 14.70. After being up briefly, the stock followed the general market lower. The shares never recovered their highs and instead drifted steadily lower. The pain continued and I ended up closing this contract for 6.30 later in the week. This trade really hurt my account and I lost $840 on this trade.
I held onto the stock the whole time however, and I expect it to recover and eventually move out to new all-time highs. In retrospect, it was not smart to buy this contract after earnings. I expected continuation and did not get it.
AAPL Nov 1 495/500 - 560/565 Iron Condor
This was an earnings trade put on just prior to the close on Monday when earnings came out after hours for a credit of $195. This stock acted perfectly and I closed out the put side (sold for a credit of $1.05) for a debit of $20 and the call side went out worthless which means I collected the entire $90 received.
FB Nov 1 49.5/50 Put Credit Spread
I put this trade on Tuesday ahead of earnings on Wednesday for a credit of 0.25. Since its a 50 cents spread it was exactly a 1/1 Risk/Reward ratio. All the stock had to do was close above $50 for me to receive the entire credit. After a wild ride later in the week, I ended up closing the spread for 0.20 taking a small profit. See below for more on Facebook which was a wild ride for sure.
BIDU Nov 1 140/145 - 175/180 - Iron Condor
This was another earnings play put on Tuesday just before the close with earnings due after hours. With the stock at $160 and an expected move of $13, I sold a put credit spread below for a credit of 1.10 and a call credit spread above for a credit of 0.85, for a combined credit of $195. The stock acted almost perfectly and I closed on the whole thing for a debit of $20 on Thursday so this trade worked out well.
LNKD Nov 1 220/225 - 275/280 - Iron Condor
This was another earnings play put on Tuesday just before the close with earnings due after. With the stock at $242 and and expected move of $21, I sold the above condor for a credit of $195. The stock acted almost perfect until later in the week. The 275/280 went out at max profit, but I close the 220/225 at a debit of 3.85. So I took a loss of $190 on this trade.
FB Nov 1 43/45 - 55/57 - Iron Condor
This was an earnings play put on Wednesday afternoon with earnings due after hours. With an expected move of $5 and the stock at about $50, I sold this spread for a total credit of 0.80. Since it was a $2 wide spread, an 80 cent credit was well over 1/3 of the width of the spreads, so this trade met my criteria. Since this was a low credit, I did 2 contracts. After much gyration of FB stock, this trade went out max profit and I collected the entire $160.
And speaking of Facebook stock, it was a wild ride in after hours. The results were good and the stock shot as high as $57.44 in the after hours. I was feeling good since I was long 500 shares in my E*Trade account. But after that, the stock went into a downward spiral and gave back the entire after hours move and actually traded as low as $47.25 later that day.
I don't ever recall seeing such a complete reversal of fortunes in after-hours trading. FB traded much like an ill-liquid futures contract going all the way up and all the way back down. I ended up closing my long stock on Friday at about $51.6 taking a 1.5 point profit on my $500 shares.
Finally, I re-loaded those same 500 shares and went out long once again on Friday at about $49.75. I will unload them next week anywhere above $51.50 if I get the chance. This is a traders market, and you have to take profits when you have them.
FSLR Nov 1 - 44/46 - 55/57 Iron Condor
This trade was put on prior to earnings on Thursday with the stock at about $50 and an expected move of .60. I got a credit of 0.38 on the put side but could not get a fill on the call side at about 0.35, which was clearly right smack in the middle of the bid/offer. I finally got frustrated a put it in at the market and they filled me at 0.13 cents. I did 2 contract, so I received a total credit of $100 for a max possible loss of $300.
Of course the stock shot higher and well above the upside strike. I ended up taking close to a max loss on this trade closing out the 55/57 spread for a debit of 1.80 for a total loss of $260 on this trade.
SNDK Nov 1 68/70 Put Credit Spread
This $2 Put Credit spread was put on earlier in the week for a credit of 0.70 which was well within my plan. The stock spent much of the week above $70 but ended up sagging at the end of the week. I closed it for 1.40 for a loss of $70.
BA Nov 1 129/130 Put Credit Spread
I put this trade on last Friday along with a small long position in BA stock. The spread was for a credit of 0.30 (times 2 contracts). The stock closed well above $130 so I collected the entire $60 profit on this trade. I did the same trade on Friday and entered the 131/133 Put Credit spread for a credit of 0.75 which is well within my plan.
All told, I lost about $785 on the week in my TradeStation account. Had I avoided the nasty loss in the directional trade in BIIB, I would have done pretty well with the earnings plays. I clearly have some work to do before I learn out to safely and regularly pull money out of the options market, but I am learning.
Have a great weekend and get some rest.
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