CTXS PCCRC
Friday was one week before expiration of the shorts on the CTXS PCCRC and I had to make a decision whether to roll to August or close the trade. With earnings coming up in a little more than 2 weeks I decided to take the small profit and close the trade. The other factor in the decision is earnings season is starting now and I expect some good PCCRC opportunities the next couple of weeks and would like to have as much capital for new positions. On Friday I closed the 5 remaining legs by selling 1 Sep 77.5 Put for 3.70 credit and selling 2 Sep 85 calls, 1 Sep 85 put, buying 1 Jul 85 call and 1 85 put for a credit of 10.90. Final tally on the trade was a profit of 12%.
TIF Call Seagull
TIF also was a the point of decision Friday and since it was losing money I also decided to close the position. Although TIF had moved 10 points higher during the trade, the drop in IV had more of an effect with the end result a 5% loss.
LULU Bullish Butterfly
LULU has continued to climb higher giving me some room in the body of the fly if it drops back some. It has an August expiration so I likely will not be changing or closing the position for a few more weeks. Unrealized profit is currently at 43%.
KMX Put Seagull
KMX has moved higher but the drop in IV has kept the position in losing territory. The shorts have an August expiration so there is some time for this one to work out. Currently the position has a loss of 1%.
JOYG Call Seagull
On Friday I opened a new Call Seagull in JOYG based on it being a high-flyer. The trade was Oct/Aug at the 95 strike for a 21.50 debit and 17 contracts. After a half day the position is showing a slight profit.
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3 comments:
Hi, have followed the CTXS over the course of 3 months so I have several questions-
1.Typically, what is the profit expectation for a PCCRC? 10-30%?
2.With earnings run-in do you not expect an IV rush to boost the position on CTXS? to profit increased profits?
3.When the CTXS trade was opened did you check when earnings was forecast to be announced for CTXS? As expiration (minus 1 week) occurs before earnings (around 7/28) was the CTXS trade an optimal trade to enter?
4.Is it better to wait till 1 month to earnings for the IV inrush or to start the trade 3 months out before earnings as was the case with CTXS?
5.What distinguishes one PCCRC from the other at the start of the trade to provide optimum profits at the end of the trade?
6.Are substantial profits only realised on large market falls with the PCCRC?
Tom
Tom,
1) a good PCCRC will give 20-30% profit. In looking thru all of my trades 75% of my PCCRCs were profitable and 40% of the profitable trades make 20% or more.
2) No. I have held these up until the day before expiration and the IV run up occurs on the shorts also negating the run up on the longs. So I have not seen a huge benefit to hold onto a trade longer, sometimes it might help, sometimes not.
3) Not sure I follow the question here. I do check to make sure I have a couple of rolls before earnings so I try to open a PCCRC soon after earnings.
4) Start 3 months out. I have not tested 1 month out but when watching IV I see the biggest jumps soon after earnings.
5) There are a number of factors and you can never tell for sure at the beginning which trade will give the best profits. That is one reason to have up to 10 PCCRCs on at one time.
6) No. My biggest gaining PCCRC was on MFE which gained over 100% after a takeover shot the stock up 12 points. My second largest gaining PCCRC was a 2010 trade on CTXS that gained 51% when CTXS went from 55 to 82 over the 71 days of the trade. The biggest winner to the downside was 32% on WHR after it dropped 9 points. So this is a bullish trade but it is nice that you can make money if the stock goes down also.
Tim
Many thanks for your responsive comments.
Tom
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