CREE and IBM Earnings
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CREE and IBM Earnings

John F. Carter 1/22/2014

Hey everybody this is John. Welcome to the free video. Did a lot of earnings plays today so far. I mean we'll see where we are in the morning but the expected move on CREE was 7 bucks. After hours were up like 2 bucks. And we did this in the earnings class that we were doing today. And we ended up doing a lot of interesting trades on this. So I'll show you kind of what the idea was -- so there's the expected move.

Trades for CREE

One thing I did, is I did butterflies at the expected move strikes. Now those are nice because you're risking essentially 90 dollars to make 900. All right. And obviously those have a lower probability of working out but it's low debit and if it does work out -- if it kind of pins at the expected move its a good payoff. So at this rate with the way it's moving those will be essentially worthless. OK, and that's fine. That's 180 bucks down the toilet. Now everything else we did with the assumption that -- with the idea that -- if it stayed within this move it'd be great. So we sold the 75 dollar calls, the 49 dollar puts, the 74.80 call spread, the 52.47 put spread. And then on the 63 puts, we also sold a straddle. So at this point this looks like it'll be a very, very profitable trade. And then the butterflies, you know, no bueno on the butterflies which is fine.

Trades for IBM

For IBM -- and we'll see. I mean this expected move here would it take -- an expected downside move -- would take it to $118.18. So far it's still within that move. Now what we did, we sold one and a half standard deviation so we should be fine there and we'll see.

What's Ahead

So what we're going to do is tomorrow morning is the last day of the earnings class and for those of you that are in that class we're going to start at 8 o'clock central and we'll go in and we'll manage these trades live. OK. And then for the general market in the premium video I showed you all the stocks that I like a lot. CELG being one of them. But for the overall market, we're just doing a whole lot of nothing here. I mean we're just kind of waiting. We're not bearish, we're not bullish, we're doing nothing. Selling premium on the Indexes here is great. Every day that the Indexes move less than 1 percent is a day that Theta goes right into your account. OK. So that's there. So we are kind of full on into earnings. The next couple of weeks is a lot of earnings coming out and we'll be following up and doing more of those plays. OK. You guys have a great night and we'll see you at the next update.