• Subscription Plans Available – One Time Payment Only

    PayPal & All Major Credit Cards Accepted
    PayPal Logo

Double Neutral Calendar Spread Strategy Placed on Red Hat (RHT) Today, 12/19/17 – After The Markets Closed

Red Hat, Inc. (RHT) has always been a good stock to use the Double Neutral Calendar Spread strategy with. As I posted on my Trading Forum page, where I post all earnings trades I place, (RHT) reported earnings after the markets closed today:

Here is the Profit/Loss Chart for this (RHT) trade:

Currently, as of 5:54 pm EST, the stock is down about $5.20 a share:

One of the main things I stress when trading and teaching about earnings trades is to use a neutral-based approach. For example, Red Hat (RHT) actually had a very good quarter, beating on revenue and earnings. This does not always matter when trading earnings releases. There are many factors that may move a specific stock: future guidance is always one of the most important.

After-hours, on the same hand, is not always an accurate prediction as to how the stock will trade the when the markets open the following morning. However, if the stock should stay in the same range as it is now, this trade looks to be a very nice winner. I paid a net debit of $1.05.

I will post an update tomorrow as to how the trade worked out. This trade does expire this coming Friday, and will all earnings trades, I like to exit as soon as possible, but will also let the time-decay factor work in my favor if I see that a lot more value can be gained by doing so.

This strategy, and all of my earnings-based trades are posted on my Trading Forum webpage.

I am currently offering a great discount on all subscription plans until December 5, 2017.

If you have any questions about this strategy, or any others, you can e-mail me at: kmob79@gmail.com

Also, if you are interested in a free PDF copy of my book on Bollinger Bands, e-mail me and I will send you a copy.

Thanks.

Update 1: 12/20/17 at 9:45 am EST: Trade is looking excellent. Will update when the positions are closed out.

Update 2 9:55 am EST: The Call Side position closed at $0.35. Will update when the Put Side position is closed.


Update 3: 10:44 am EST. The Put Side of this trade is currently has a bid/ask price of $0.70 – $1.70, which will narrow out shortly. Trade is in a great position here, right near the put strikes. Time-decay will keep increasing value.


Update 4: 3:35 pm EST. I will be closing the Put Side position tomorrow to let the time-decay factor add even more value. The current Greeks/NBBO on (RHT) trade:

I will also provide a follow-up to this specific trade, why I chose the strikes I did, the expiration dates, and philosophy of the strategy itself. Soon, I will be writing a book on the Double Neutral Calendar Spread strategy that will go into my past trades over the years using it, when to take advantage of it, and why I feel it is one of the best earnings strategies there is. Follow up tomorrow when the position is closed.

Final Update: 12/22/17. The entire position has been closed out a net credit of $2.00.

Daily Options Trading Strategy (DOTS) and Earnings Trades, Refer-A-Friend Subscription Match Plan, San Diego Seminar In June 2016

There have been some very quick in and out trades lately on the Daily Options Trading Strategy (DOTS). You can see the Trade Log at http://kevinmobrien.com/?page_id=480.

Also, earnings trades have also been going very well, some of which I post for free weekly here on my website such as Square (SQ), Red Hat (RHT), CarMax (KMX), and others. Each week, there are always plenty of trading opportunities with earnings releases, and when you use a neutral-based approach as I do, it takes the guessing game out of the equation as to which direction a security will move post-earnings.

Each subscription not only includes my daily DOTS trades, but access to the Trading Forum, where all earnings, weekly, and long-term trades are posted. But there is more than that: I answer questions all day while trading, as my style of trading offers the opportunity to directly communicate with subscribers and to answer any questions you may have throughout the day, along with interacting with many trader’s all over the world. Whether on Skype, Chatzy, or by e-mail, I am always available to help assist you in understanding stock options and trading.

I am offering a Refer-A-Friend Subscription Match Plan until next Friday, April 15,2016. On any subscription plan three (3) months or longer, I will match that for a friend or family member, so basically you can get the subscription at half price that way when referring someone.

On June 13 – 17, 2016, I will be having a seminar in San Diego, CA at the San Diego Convention Center that is both teaching and live trading debit spreads for earnings and weekly trades. If you are interested in these great trading strategies, you won’t find a better teacher of them, I can assure you. Here is the link to the seminar and more additional information: http://kevinmobrien.com/?page_id=1690. Each attendee also receives a free three (3) month subscription to my Trading Forum http://kevinmobrien.com/forum/index.php.

If you have any questions, please feel free to e-mail me anytime at: kmob79@gmail.com. Thanks again.

-Kevin

Free Earnings Trade of the Week: CarMax Inc. (KMX) – Reports Before The Markets Open 4/7/16

CarMax Inc. (KMX) is scheduled to report earnings before the markets open on Thursday, 4/7/16.

Last quarter, the stock had the following price movement after reporting earnings:

Dec 18, 2015

53.44
53.90
50.57
53.49
20,119,800
53.49

Dec 17, 2015

58.81
59.16
57.11
57.15
4,757,100
57.15

While the stock moved down a decent amount last quarter, it wasn’t too significant. Even if the stock were to repeat the same movement this quarter, the Neutral Calendar Spread strategy will do well. The current Implied Volatility on the April 2016 calls is 76, while the May 2016 calls are at 42, so this is an angle to take advantage of, especially on a non-volatile stock. I am giving this trade a 9/10.

Here is how the trade is placed:

Entered Trade

Sell -25 KMX Apr16 52.5 Call

Buy 25 KMX May16 52.5 Call


Requirements

Cost/Proceeds
$1,375.00
Option Requirement
$0.00
Total Requirements
$1,375.00
Estimated Commission
$75.00


Greeks / NBBO

IV
KMX Apr16
52.5 Call
76.21

KMX May16
42.02


NBBO
0.40 – 0.75. Try to pay 0.55 or less for this trade. At a maximum, pay up to 0.58. See the attachment for the profit/loss chart.

KMX NCS 4616

I will post the price to close this trade out tomorrow right before the opening bell.

Update 1: 9:25 am EST:
Pre-market, the stock is up about $1.70/share. It also had a bit of a run-up late yesterday before the markets closed, but nothing major. I am placing the price to close this trade out at $1.50 for now. I will update any changes here, if needed.

Free Earnings Trade of the Week: Red Hat, Inc. (RHT) – Reports After The Markets Close On Tuesday, 3/22/16

Red Hat, Inc. (RHT) is scheduled to report earnings after the markets close on Tuesday, 3/22/16.

Last quarter, the stock had the following price movement after reporting earnings:

Dec 18, 2015

83.01
83.99
80.45
81.40
7,692,400
81.40

Dec 17, 2015

78.81
79.34
77.66
78.86
2,688,600
78.86

(RHT) can be very unpredictable in terms of price movement post-earnings. A few keys to picking a strategy to use is the amount of movement allowed (up or down), strike price increments available, and the cost to place the trade. On this specific (RHT) trade, I think the Neutral Calendar Spread strategy is the right way to play this trade. The break-even points are very wide, and the price is very good. Even if the stock moves $5.00 + or more either way tomorrow, this trade will still do well and hold value even if it moves more than that, so I consider this trade very low risk with great potential. 9.5/10.

Note: I recommend placing this trade as soon as possible, as the value will most likely increase throughout the day. There is a possibility that the trade can be closed out for a profit by the end of the day if filled early. I will post that at the end of the trade details.

Here is how the trade is placed:

Entered Trade

Sell -25 RHT Apr16 75 Call

Buy 25 RHT May16 75 Call


Requirements

Cost/Proceeds
$1,875.00
Option Requirement
$0.00
Total Requirements
$1,875.00
Estimated Commission
$75.00

NBBO
0.40 – 1.10. Try to pay 0.75 or less for this trade. At a maximum, pay up to 0.85 if late.

If there is an opportunity to close out the trade early (taking less profit) if your order is filled at 0.80 or less, place the closing order out at 1.25 as a day order only.

I will post the price to close this order out tomorrow pre-market, right before the opening bell
RHT NCS 32216
See the attachment for the profit/loss chart.

Update 1: 9:25 am EST: Pre-market, the stock is down about $2.50/share, so using the Neutral Calendar Spread strategy looks very good here. I am placing the price to close the trade out at 1.90 for now. I will update any changes here, if needed.

Update 2: 1:05 pm EST. This trade is looking excellent right now. Time-decay and the current movement is going to increase value quickly. The price to close the trade out is still at $1.90.

  • Subscribe to Blog via Email

    Enter your email address to subscribe to this blog and receive notifications of new posts by email.

    Join 115 other subscribers

  • Recommended Books on Amazon.com