NOV Bullish Diagonal
NOV took a hit last Wednesday after an earnings miss and was down almost 3 points on the week. I covered NOV before earnings then rolled down the May 85 short calls out to June after they dropped quickly after earnings. Profit on the position is now at 348%.
XLE Bullish Diagonal
There were no trades in XLE this week and it remained uncovered. Profit is at 639%.
UA Bullish Diagonal
UA also had a big drop after earnings Tuesday and continued down later in the week. The shorts were rolled from the 85 strike to the 77.5 strike after the short was 20% of its initial value. Profit stands at 177%. If UA goes much lower I will be closing the position.
MHS Bearish Diagonal
MHS beat earnings estimates on Thursday and shot higher. I decided to close the position which had a 36% loss.
CTXS Bullish Diagonal
CTXS showed up on my PCCRC scan on Thursday. After looking through my results over the past several months I noticed that 75% of my PCCRCs went up in price (and were profitable). My diagonals have only gone the direction I design them 50% of the time. Matt is better at picking direction of stocks and has a 60-70% success rate. So I decided to screen for a trade using the PCCRC criteria but place a diagonal trade on it. Generally a successful PCCRC would gain more if traded as a diagonal if the stock moves up. Both are Vega, Delta, and Theta positive with the diagonal having more Delta and the PCCRC more Vega. For comparison on this trade I will paper trade a PCCRC at the same time. The diagonal was long 3 Sep 80 calls and short 3 May 90 calls for 9.10 debit right now this trade is down 2%.
The PCCRC is 2 contracts of the Sep/May 85 strikes for 24.35 debit. It is down 2% right now also.
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3 comments:
What entry rules do you use for the PCCRC?
Can you advise trading plan for the PCCRC trade on CTXS?
When is first adjustment, near expiration?
Can you confirm the order for the CTXS diagonal?
Text reads
BTO 3 Sept-11 80 Calls
STO 3 Oct-11 90 Calls.
TOS interface shows
BTO 2 Sept-11 80 Calls
STO 2 Oct-11 90 Calls.
Tom,
There are a couple of potential entries for PCCRCs. The one I usually use is a stock that has just reported earnings has beat earnings and/or raised guidance, has jumped >10% the day of the earnings announcement, has average volume > 1,000,000 shares a day, price > 30, and has an IV between 25 and 40. I use the Scan tab Stock Hacker in TOS to automatically search for PCCRC candidates.
The trading plan for the shorts is to roll out one month, same strike one week prior to expiration if the trade is profitable. For the longs you have a couple of adjustment choices if the stock moves. For example if the stock moves up you can roll the long calls to a higher price or sell off some of the excess (number of long calls greater than number of short calls, which depends on how large of a position you start with) long calls. In this case there is only one excess long call so the first choice will probably be used. Same thing if the stock moves down except apply it to the puts and roll down. This roll in effect locks in same gains in case the move reverses and still allows for further upside if the move continues.
The CTXS position is 2 contracts, I had a mistake in the screenshot showing 3 contracts.
Tim
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