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Earnings Trade of the Week: Skechers U.S.A., Inc. (SKX) – Reports After The Markets Close On Thursday, 4/21/16

Skechers U.S.A., Inc. (SKX) is scheduled to report earnings after the markets close on Thursday, 4/21/16.

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

Feb 11, 2016


Feb 10, 2016


The Implied Volatility (IV) on the weekly April Week 4 expiration at-the-money strike is a extremely high 301.69, compared to the May 2016 at-the-money strike of 66.77. Clearly, there is a big price move expected in relation to the share price. I don’t think it happens. Just as last quarter, the stock really didn’t move too much, and while I expect it to do more than that this quarter, a trader has to take advantage of past history and an elevated IV level as this trade has, which will again be a Neutral Calendar Spread. This trade, as mentioned, has weekly options, is priced very good, and a lot of factors working in its favor. It will also hold value very well even in the event it moves more than expected post-earnings. I am giving this trade a 10/10. A must trade.

Here is how the trade is placed:

Entered Trade

Sell -75 SKX AprWk4 30 Call

Buy 75 SKX May16 30 Call


Option Requirement
Total Requirements
Estimated Commission

Greeks / NBBO

SKX AprWk4
30 Call

SKX May16
30 Call

0.25 – 0.50. Try to pay 0.38 or less for this trade. At a maximum, pay up to 0.41.

See the attachment for the profit/loss chart.

SKX NCS 42116

Update 1: 4/22/16, 9:20 am EST: Pre-market, the stock is up $2.20/share. I am placing the price to close this trade out (net credit) at 1.00. I will update any changes here, if needed.

Update 2 9:34 am EST: : Price to close this trade out now at 0.85.

Daily Options Trading Strategy (DOTS) – Busy Week So Far (4/18/16 – 4/22/16)

There have already been six (6) trades placed and closed out today using the Daily Options Trading Strategy (DOTS), along with a good day trading yesterday. You can see the trade log here http://kevinmobrien.com/?page_id=480, where I post my trades daily and those in the Skype and Chatzy chatroom in real-time, providing in advance of each trade the ticker symbol, strike price, expiration, and my sell-to-close price above the price paid per contract.

I am on both Skype and Chatzy (Chatzy is great for mobile devices, so use this as a supplement for trader’s on the go) from 8:00 am EST until the markets close each day. Along with the trades posted in real-time daily, I also answer questions throughout the day. I am offering a reduced subscription rate for all plans until next Monday, 4/25/16. Each subscription also includes access to my Trading Forum, at http://kevinmobrien.com/?page_id=127, where I post weekly, earnings, and long-term trades.

If you have any questions, you can e-mail me anytime at kmob79@gmail.com



Current Daily Options Trading Strategy (DOTS) List – Updated 4/18/16

Here is the current list of stocks I use for the Daily Options Trading Strategy (DOTS). Updated on Monday, April 18, 2016:





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.


Daily Options Trading Strategy (DOTS) Updated List – 3/11/16

Here is the current (4) tier list of the Daily Options Trading Strategy (DOTS), current as of 3/11/16:





If you have any questions about the strategy or stock options in general, you can e-mail me anytime at kmob79@gmail.com

Determining Sell-To-Close Prices Using the Daily Options Trading Strategy (DOTS)

There are numerous factors I consider when choosing sell-to-close (STC) price when using the Daily Options Trading Strategy (DOTS). Among them are the following:

  • The share price for each security
  • The stocks volatility, daily highs and lows, and current market conditions
  • Width of Bollinger Bands
  • The time of day the trade is placed
  • The current bid/ask price
  • Leverage

The share price is extremely important when choosing a STC price. For example, a stock such as Netflix (NFLX) will have a higher STC than Twitter (TWTR) based on share price. NFLX is currently around $99.00/share, while TWTR is $28.00/share. On average, the minimum STC I would have on NFLX is about $0.40. This means that if I paid $4.00 per contract, my STC would be at $4.40. For TWTR, the average STC would be between $0.20 – $0.30. If the price per contract is at $1.20, the STC would be between $1.40 – $1.50.

A stock like Google (GOOGL), however, would have a much higher STC. Since the current share price is around $630.00/share, the minimum STC would be about 0.70, but usually much higher, $1.00+. This is because of higher price per contract paid, it moves more in dollar increments, and has wider daily price swings.

A stock that has higher volatility also plays a role in choosing a STC that assures the trade will be exited as soon as possible. Some of the stocks on the DOTS list simply move a lot more than the others daily.  This is why I have the 3 Tiers with 27 total stocks. I will always prefer to trade stocks that are higher-priced and have larger daily swings. Tier 1 has that. This not to say that stocks on Tier 2 and Tier 3 are not great for trading, they are, but generally the Tier 1 stocks will take a lot sooner to exit than the Tier and Tier 3 stocks. On the same hand, stocks like TWTR, BABA, FB, BA, and CRM all have inexpensive contracts that allows traders to use that as leverage. For example, if it cost me $10.00 per contract to trade a GOOGL strike price, but only $2.00 to trade FB, then I would multiply the contract size on the FB trade five times that of GOOGL to basically have the same cost basis.

  • GOOGL 10 contracts X $10.00/contract = $10,000.00 cost to place trade. $1.00 STC above price paid/contract = $11,000.00 (minus commission costs).
  • FB 50 contracts X $2.00/contract = $10,000.00 cost to place trade. $0.20 STC above price paid/contract = $11,000.00 (minus commission costs).

The minor downside is that FB will take a bit longer to exit than GOOGL would, but this is not always the case. Just understand that after years of trading my strategy, this is generally true of the lower priced stocks. I actually find TWTR to be more volatile than FB, and those contracts are even lower-priced than FB.

The time the trade is placed is also very important. If it is very early in the day, I will use a higher sell-to-close price than I would if there were only two hours left in the trading day. If early, I can always adjust the STC price and lower it, as there is still plenty of time left. If I place a trade at 2:00 p.m. EST, my STC would be more conservative. This is due to lower volume, possible pinning (happens often late Friday’s). If there is an early GOOGL trade at 9:50 am am EST, I would use a STC starting at $1.50 above price paid per contract. Then, depending on the price movement, would adjust and lower accordingly from there (increases happen, as well).

The Bollinger Bands play a very important role in determining my STC price. This is often gained from experience trading the strategy and repetition. If I see a GOOGL chart, where the bands are extremely wide, and all of the bottom 4 indicators are showing extremely oversold for a call buy, I will not hesitate starting with a much higher STC than I usually would. PCLN has this happen often. The one main issue with a stock like PCLN is the bid/ask prices, which I will get into later. A couple of years ago I had a PCLN call trade that had a $5.00 STC order above price paid per contract that cost $18.00 initially. If I see an APPL chart, and there is a $4.00 + difference from high to low daily when the time to place a trade is available, I would set a STC higher than usual. On TWTR or GPRO, for example, if I see a $2.00 difference from the high to low, this would also be a situation where an increase STC price is appropriate. One thing I look at also is the top Bollinger Band high and the Bottom Bollinger Band low, not necessarily the price action, but the Bands themselves. This is a great indicator of where the stock can move to.

Bid/ask prices are also very important and play an important role in my STC prices. As I mentioned, PCLN could probably be traded at least 3 times per day if only the bid/ask prices were reasonable. Especially the last few months, I am seeing a bid/ask difference on the strike prices that are sometimes $3.00 + apart. This is impossible to trade. Occasionally, I will see PCLN strikes that are about $1.20 apart. I will trade this, but would have initially been a $2.00 + STC price above the price paid per contract, I would automatically know to place the STC at $1.00, maybe slightly more. This is because since these trades are round-trip trades, getting in and out of the trade will cut profits simply due to the wide bid/ask prices. If PCLN should ever have a stock split (hope it’s soon), it would probably take over as the #1 DOTS stock to trade. GMCR, even as a lower-priced DOTS stock, has had this issue with the bid/ask prices being too wide. Currently at $58.50/share, the $56.00 strike price call options are trading at $2.24 – $2.76. This is too wide. If my pre-determined STC price would be at $0.30 above price paid per contract, it would be extremely difficult to exit this trade without needing double the price move of the share price. A more reasonable bid/ask would be $2.25 – $2.35 or $2.20 – $2.40 even.

There are trading opportunities where I will buy a lot more calls or puts than usual. In situations like this, since you are more leveraged, the STC can be lowered. I will do this especially if it is later in the trading day. 100 contracts will require a lot less of a price move to exit the trade than 50 contracts would. If I have 100 contracts on TWTR at $1.20 per contract and my initial STC price was at $0.30, I would have no problem lowering that to $0.20 if I wanted to close the trade out as soon as possible. If a STC on GOOGL was initially set at $1.00, lowering that to $0.70- $0.80 is perfectly fine.

My subscription service on Skype and Chatzy for these DOTS trades does provide all of these real-time STC orders, but I wanted to give everyone a good gauge on how to determine what STC orders are appropriate under each circumstance.

If you have any questions about determining a STC price, you can leave a comment here or e-mail me at kmob79@gmail.com.



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