As I read through last Sunday’s post, I realized a few things: First, that I was really wishy-washy in my statements and second, it wasn’t my best week. But there’s something to be said for mistakes and analyzing them.
AA – I said: “I'm inclined to avoid this one because something about it seems "off" …Downside support would be at the SMA(30)/(50) at 10.15/10.24 respectively and below that around the 9.40-9.50 area.
What happened: Well, it closed on 1/13 at 9.55 but if you were nimble a strangle still could have scored a limited profit since the day’s low was 9.30. I’m going to give myself -1 point on this because the trade could have been profitable and my downside targets were a tad too optimistic.
DNA – I said: “… a strangle here doesn't make much sense, it is worth paying attention to as a straight momentum play if it turns out this rumor has any substance.”
What happened: Well, +0.5 points for avoiding the strangle as it never would have paid off.
INTC – I said: “It's currently sitting right at the SMA(30/50) 14.26/14.19 and if those levels fail it could eventually slide down to the 12.50 area.…this is another case where a strangle makes little sense on the assumption that a lot of the news is already priced in.”
What happened: This is more difficult because INTC moved quite a bit from the Sunday pricing until Thursday when it hit 12.70. So +0.5 for the 12.50 not being broken but -0.5 since a strangle opened on the pricing on the sheet would actually have been profitable, though you would have had to pull the plug before earnings instead of after. Net 0 points here.
MI – I said: “that is just about as close to failure as you can get. Plus, the volume ticked up a bit there. Ouch. MI has only once been as volatile as the options contracted pricing implies so again, best avoided as an event play but might be worth a watch as a short.”
What happened: Well, I was right and wrong here. It would have been a great strangle so -0.5 points. But it was also a great short so +0.5 points. Another net zero.
That’s all for the week since I didn’t bother commenting on Friday’s plays. Considering the movement from Monday to Friday I’m glad I didn’t.
Week’s Total Score: -0.5 points
Running aggregate score: +3 points
Showing posts with label Keepin' Score. Show all posts
Showing posts with label Keepin' Score. Show all posts
Saturday, January 17, 2009
Sunday, January 11, 2009
Keepin' Score (1/5/2009)
Another round of Keepin' Score, recapping last week. I would rather have had this out yesterday but assorted other tasks intruded. I'm still tweaking and adding to the scoring system I outlined in a previous post so bear with me on that count. Here we go!
MOS - I said: "A favorable reaction to news would bring a 1st (and easily hit) level of about 38 and a 2nd level in the 42 area. A lousy report could send this sliding back to the 30 area from where it began this 20% run to its current 36.86."
What happened: The 38 area was taken out even before earnings by the updraft in the market. Drift after that carried it up to a high for the week of 41.15, shy of the 42 upper level. 0 points for this... the low level was too easily taken out and it didn't get close enough to the high.
MON - I said: "...it will likely get some sympathy movement with MOS", "...on the upside it will see resistance around 77-78, with an outside chance of recovery to mid-December high around 84."
What happened: +0.5 for the sympathy move with MOS and that it didn't take out 77 at that point. -0.5 points since MON broke above 84 right after earnings with a big gap on a strong market day. I'm going to also give this a 0 total points even though MON did drift back down and only closed one day above 84.
BBY - I said: "...options pricing reflects the historic movement pretty well so barring some cheapening of contracts, this is probably just as well watched for potential break-out given the chart pattern rather than as an earnings play."
What happened: +0.5 point since share price never went above or below the break-even share pricing of 29.25/23.25.
FDO - I said: "FDO doesn't usually move much at earnings however so let's move on."
What happened: Even though FDO didn't get past the upper break even price of 29.16, I am only giving this +0.5 point because it moved more than I expected it to. I suppose if one were brave and/or lucky, buying calls near the low of the day before earnings might have been profitable.
APOL - I said: "...if the break-even pricing for the strangle still reflects what is shown in the sheet, it would be worth playing."
What happened: +0.5 points since a strangle based on the prices in the earnings sheet would have been profitable. But IV inflation did creep in throughout the week so depending on when one would have purchased the position would vary the profitability. One of the downfalls of a Sunday look-ahead I guess.
CVX - I said: "never really moves. Just watch crude."
What happened: CVX didn't really move. +0.5 points.
AZZ/KBH - I said: "Probably best to avoid./Another one that seems not worth the bother."
What happened: Neither one made it past break-even prices. +0.5 points there.
Total score for the week: +2.5 points
Aggregate score: +3.5 points
MOS - I said: "A favorable reaction to news would bring a 1st (and easily hit) level of about 38 and a 2nd level in the 42 area. A lousy report could send this sliding back to the 30 area from where it began this 20% run to its current 36.86."
What happened: The 38 area was taken out even before earnings by the updraft in the market. Drift after that carried it up to a high for the week of 41.15, shy of the 42 upper level. 0 points for this... the low level was too easily taken out and it didn't get close enough to the high.
MON - I said: "...it will likely get some sympathy movement with MOS", "...on the upside it will see resistance around 77-78, with an outside chance of recovery to mid-December high around 84."
What happened: +0.5 for the sympathy move with MOS and that it didn't take out 77 at that point. -0.5 points since MON broke above 84 right after earnings with a big gap on a strong market day. I'm going to also give this a 0 total points even though MON did drift back down and only closed one day above 84.
BBY - I said: "...options pricing reflects the historic movement pretty well so barring some cheapening of contracts, this is probably just as well watched for potential break-out given the chart pattern rather than as an earnings play."
What happened: +0.5 point since share price never went above or below the break-even share pricing of 29.25/23.25.
FDO - I said: "FDO doesn't usually move much at earnings however so let's move on."
What happened: Even though FDO didn't get past the upper break even price of 29.16, I am only giving this +0.5 point because it moved more than I expected it to. I suppose if one were brave and/or lucky, buying calls near the low of the day before earnings might have been profitable.
APOL - I said: "...if the break-even pricing for the strangle still reflects what is shown in the sheet, it would be worth playing."
What happened: +0.5 points since a strangle based on the prices in the earnings sheet would have been profitable. But IV inflation did creep in throughout the week so depending on when one would have purchased the position would vary the profitability. One of the downfalls of a Sunday look-ahead I guess.
CVX - I said: "never really moves. Just watch crude."
What happened: CVX didn't really move. +0.5 points.
AZZ/KBH - I said: "Probably best to avoid./Another one that seems not worth the bother."
What happened: Neither one made it past break-even prices. +0.5 points there.
Total score for the week: +2.5 points
Aggregate score: +3.5 points
Sunday, December 21, 2008
Keepin' Score (12/15)
BBY - I said: "Positive news could boost them to the 29 area..."
What happened: +0.5 points for highs of 29.04 and 29.66 on 12/17 and 12/18 respectively, despite some rather grim comments. I would add that I really should change my phrasing from "positive news" to "positive reaction" since perception and reaction seems to have little connection to whatever is stated or implied.
NKE -I said: "NKE is intriguing but the options pricing is very reflective of the chart and has a break-even low price of 42.50, which would be just below the recent lows. Another one to probably avoid unless you feel like gambling with naked puts on op-ex week."
What happened: -0.5 points since NKE would have been profitable on a strangle when NKE hit 54.25 on the 18th.
JOYG -I said: "The break-even high at 24.88 leaves little room for error with the 50 DMA just above that at 24.98. Another one with no clear reason to play on op-ex week."
What happened: -0.5 points since JOYG would have been profitable at the high price of 26.50 on the 17th.
RIMM -I said: "This one is attractive to play as a strangle, even with the warning that these contracts will be worthless if the shares do not make the appropriate move."
What happened: RIMM gave good guidance and the 2.46 which would have been kind of a worst case price for the strangle would have paid off 59 cents when the 40 calls sold for 3.05. (They peaked higher than that, later.) +1 point for getting the strangle call correct.
Total: +0.5 points for the week.
Aggregate Total: +1.0 points
As I was writing this week's Keepin' Score recap, it occurred to me that I should have some kind of standard and consistent scoring scheme going forward. Here's what I was thinking:
+0.5 points: getting a high or low level correct even if the release isn't worth playing.
-0.5 points: stating a particular release is not worth playing and then it turns out that it would have been profitable to do so.
+1.0 points: Recommending an ultimately profitable strategy.
-1.0 points: Recommendation is not profitable.
I'll probably tweak them a bit as different situations arise but they should serve as a start.
What happened: +0.5 points for highs of 29.04 and 29.66 on 12/17 and 12/18 respectively, despite some rather grim comments. I would add that I really should change my phrasing from "positive news" to "positive reaction" since perception and reaction seems to have little connection to whatever is stated or implied.
NKE -I said: "NKE is intriguing but the options pricing is very reflective of the chart and has a break-even low price of 42.50, which would be just below the recent lows. Another one to probably avoid unless you feel like gambling with naked puts on op-ex week."
What happened: -0.5 points since NKE would have been profitable on a strangle when NKE hit 54.25 on the 18th.
JOYG -I said: "The break-even high at 24.88 leaves little room for error with the 50 DMA just above that at 24.98. Another one with no clear reason to play on op-ex week."
What happened: -0.5 points since JOYG would have been profitable at the high price of 26.50 on the 17th.
RIMM -I said: "This one is attractive to play as a strangle, even with the warning that these contracts will be worthless if the shares do not make the appropriate move."
What happened: RIMM gave good guidance and the 2.46 which would have been kind of a worst case price for the strangle would have paid off 59 cents when the 40 calls sold for 3.05. (They peaked higher than that, later.) +1 point for getting the strangle call correct.
Total: +0.5 points for the week.
Aggregate Total: +1.0 points
As I was writing this week's Keepin' Score recap, it occurred to me that I should have some kind of standard and consistent scoring scheme going forward. Here's what I was thinking:
+0.5 points: getting a high or low level correct even if the release isn't worth playing.
-0.5 points: stating a particular release is not worth playing and then it turns out that it would have been profitable to do so.
+1.0 points: Recommending an ultimately profitable strategy.
-1.0 points: Recommendation is not profitable.
I'll probably tweak them a bit as different situations arise but they should serve as a start.
Saturday, December 13, 2008
Keepin' Score (12/08/08)
One thing I've been somewhat remiss about since I started commenting and venturing opinions on how a stock might behave around earnings, is keeping track of how I've actually done. This will hopefully rectify that. If you think I'm being too generous with my scorekeeping, feel free to say so. This refers back to the earnings post for 12/08.
HRB -
I said: "At the moment, I'm skeptical that this could break through those barriers [20.75 & 21.59] significantly. On the downside, the channel bottom is around 15.50-15.75. Odds would seem to be in favor of some downward movement here."
What happened: +1 point for not closing above 20.75 until Friday but -1 point for expectations of downward movement. Total = 0
AZO -
I said: "Upside limit here would probably be 129 area (the late Oct high) and the low barrier appears to be around 100 by options expiration."
What happened: +0.5 point for not closing above 129 until Friday.
LULU -
I said: "the B/E % moves are a bit high considering history. (+27.9%/-19.37%). There is a reasonable chance of being able to leg into a strangle position with much better prices based on the assumption of continued upward price movement in the first part of the week. Calls on Monday, puts later on Wednesday - maybe around the 13 area if you're lucky."
What happened: This is tougher to score. +1 for the leg in strangle/straddle idea even though the week high was only 11.88. -0.5 points for not thinking that the strangle would be profitable based on the break-even numbers from Sunday. LULU closed Thursday at 7.08, over 30% off and far below the break even share price of 8.70. Total: +0.5.
Aggregate Total = +0.5 points.
HRB -
I said: "At the moment, I'm skeptical that this could break through those barriers [20.75 & 21.59] significantly. On the downside, the channel bottom is around 15.50-15.75. Odds would seem to be in favor of some downward movement here."
What happened: +1 point for not closing above 20.75 until Friday but -1 point for expectations of downward movement. Total = 0
AZO -
I said: "Upside limit here would probably be 129 area (the late Oct high) and the low barrier appears to be around 100 by options expiration."
What happened: +0.5 point for not closing above 129 until Friday.
LULU -
I said: "the B/E % moves are a bit high considering history. (+27.9%/-19.37%). There is a reasonable chance of being able to leg into a strangle position with much better prices based on the assumption of continued upward price movement in the first part of the week. Calls on Monday, puts later on Wednesday - maybe around the 13 area if you're lucky."
What happened: This is tougher to score. +1 for the leg in strangle/straddle idea even though the week high was only 11.88. -0.5 points for not thinking that the strangle would be profitable based on the break-even numbers from Sunday. LULU closed Thursday at 7.08, over 30% off and far below the break even share price of 8.70. Total: +0.5.
Aggregate Total = +0.5 points.
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