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Daily Options Trading Strategy Stocks/ETF’s Used – Current as of 11/26/2013

Tier 1:

Apple (AAPL)
Baidu (BIDU)
CF Industries (CF)
Google (GOOG)
LinkedIn (LNKD)
Netflix (NFLX)
Priceline.com (PCLN)
Amazon.com (AMZN)

Tesla Motors (TSLA)

Tier 2:

Facebook (FB)
Ulta Salon (ULTA)
Salesforce.com (CRM)
F5 Networks (FFIV)
Green Mountain Coffee Roasters (GMCR)
Direxion 3X Gold Miner’s Bull ETF (NUGT)
Chipotle Mexican Grill (CMG)
Mastercard (MA)
Sina Corp. (SINA)

Tier 3:

Citigroup (C)
Visa (V)
Zillow (Z)
Yelp (YELP)
Wynn Resorts (WYNN)
Ralph Lauren (RL)
VMware (VMW)
Buffalo Wild Wings (BWLD)
SanDisk (SNDK)

Tier 4:

Bank of America (BAC)
Dendreon (DNDN)
LuleLemon (LULU)
Las Vegas Sands (LVS)
FedEx (FDX)
Lockheed Martin (LMT)
Goldman Sachs (GS)
Pandora (P)
Berkshire Hathaway (BRK-B)

Free Earnings Trade of the Week – Wednesday, 11/20/13

Free Earnings Trade of the Week: Green Mountain Coffee Roasters (GMCR) – After the markets close on Wednesday, 11/20/13.

Green Mountain Coffee Roasters, Inc. (GMCR) is scheduled to report earnings after the markets close on Wednesday, November 20, 2013.

Green Mountain Coffee Roasters, Inc. is well known to move a lot after reporting. On their May 8th report, the stock made a $17.00+ move upwards. While last quarter was a little more tame, this stock is very consistent when using a Reverse Iron Condor. A Strangle strategy is not the smart choice here. It is extremely expensive and too much of a price move is needed just to break-even. While there is the chance that GMCR may make a move similar to the May 8th report, it is naive to think that will happen all the time. This strategy is definitely the right move to make for this stock. I am also using the November Week 5 expirations, as a safety net in the event the price move is only moderate (which I do not expect at all). I am extremely confident in this trade and recommend using at least a 5% allocation. Here is the stock movement after the the last three quarters:

Aug 8, 2013 73.50 79.60 72.49 76.48 12,762,500 76.48
Aug 7, 2013 81.02 81.10 78.51 79.26 7,275,200 79.26

May 9, 2013 67.92 76.99 67.00 76.04 26,218,400 76.04
May 8, 2013 58.94 59.48 57.76 59.48 8,942,500 59.48

Feb 7, 2013 44.66 47.55 43.85 46.32 18,430,600 46.32
Feb 6, 2013 47.54 49.10 46.68 48.94 11,083,500 48.94

Here is how the trade is placed:

Entered Trade

Buy 20 GMCR NovWk5 56 Put
Sell -20 GMCR NovWk5 55 Put
Buy 20 GMCR NovWk5 66 Call
Sell -20 GMCR NovWk5 67 Call

Requirements

Cost/Proceeds $1,200.00
Option Requirement $0.00
Total Requirements $1,200.00
Estimated Commission $120.00

Greeks / NBBO

Symbol Bid Ask IV Delta Gamma Vega Theta
GMCR NovWk5
56 Put 1.85 1.95 112.01 -526.00 60.21 63.16 -392.00
GMCR NovWk5
55 Put 1.57 1.66 112.73 463.56 -55.91 -59.03 368.84
GMCR NovWk5
66 Call 2.33 2.46 105.66 742.67 73.93 73.16 -430.60
GMCR NovWk5
67 Call 2.02 2.14 105.05 -672.73 -71.78 -70.62 413.17
Net 7.50 6.45 6.67 -40.59

NBBO 0.38 0.82, Try to pay 0.60 or less for this trade. At most, pay 0.65. See the attachment for the profit/loss chart.

GMCR RIC 112013

Free Trade of the Week: Cisco Systems, Inc. (CSCO) – Earnings Trade – After the markets close 11/13/13

Cisco Systems, Inc. (CSCO) is scheduled to report earnings after the markets close on Wednesday, November 13, 2013.

Historically, the stock has a tendency to move after-hours with a lot of volume. More recently (the past few quarters), there have been larger price moves than usual. Still, looking at the profit/loss chart, I see a great opportunity to use a Neutral Calendar Spread, as the break-even points are wide and I am anticipating about a $0.75 tomorrow either way.

While the trade does carry some risk in the event it moves a lot, I think this trade is priced very good and should do well. I recommend using a 4% allocation. The after-hours action is usually meaningless with this stock, similar to how Intel (INTC) trades after-hours.

Here is how the trade is placed:

Entered Trade

Sell -40 CSCO Nov13 24 Call
Buy 40 CSCO Dec13 24 Call

Requirements

Cost/Proceeds $840.00
Option Requirement $0.00
Total Requirements $840.00
Estimated Commission $120.00

Greeks / NBBO

Symbol Bid Ask IV Delta Gamma Vega Theta
CSCO Nov13
24 Call 0.48 0.49 82.47 -1,826.09 -1,092.05 -27.94 577.20
CSCO Dec13
24 Call 0.69 0.70 25.80 1,918.41 815.50 120.74 -43.26
Net 92.32 -276.55 92.80 533.94

NBBO 0.20 0.22. Try to pay 0.21 or less for this trade and up to 0.22. See the attachment for the profit/loss chart.

CSCO NCS 111313

 

 

Free Trade of the Week 11/1/2013 – Kellogg Company (K) – Earnings Trade-  Reports before the markets open 11/4/13
Kellogg Company (K) is scheduled to report earnings before the markets open on Monday, November 4, 2013.

This is the type of stock where little price movement is a normal occurrence after reporting earnings. This fits perfectly with a Neutral Calendar Spread strategy. Last quarter, the stock had the following price movement:

Aug 6, 2013 65.24 65.90 64.98 65.80 2,279,800 65.30
Aug 5, 2013 65.23 65.45 64.86 65.18 1,384,300 64.69

This trade is also priced great. It should do very well. I am recommending using at least a 5% allocation here, preferably more. Here is how the trade is placed:

Entered Trade

Sell -30 K Nov13 62.5 Call
Buy 30 K Dec13 62.5 Call

Requirements

Cost/Proceeds $750.00
Option Requirement $0.00
Total Requirements $750.00
Estimated Commission $90.00

Greeks / NBBO

Symbol Bid Ask IV Delta Gamma Vega Theta
K Nov13
62.5 Call 1.05 1.20 19.41 -1,689.85 -494.98 -145.37 103.58
K Dec13
62.5 Call 1.30 1.40 15.13 1,510.42 346.29 273.40 -44.67
Net -179.43 -148.69 128.03 58.91

NBBO 0.10 0.35. Try to pay 0.25 or less for this trade, and up to 0.30. See the attachment for the profit/loss chart.

 

K NCS 11413

 

Update: (K) is looking good pre-market. only up 1.78%> I have my order to close the trade in at $0.65.

 

Update: 11/7/13: The trade is doing well. Currently, the bid/ask is 0.30 – 0.50. Cost was 0.25. My target exit price is 0.55.

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