Thoughts of a mechanical engineer turned programmer turned statistical investor. Here to save you from making mistakes I made at the beginning of my investing career.

The week ahead

This coming week is the main earnings week, with most of the megacaps reporting, including GOOG, V, FB, AAPL, AMZN:

In earnings weeks I like to go over my portfolio to verify that I feel comfortable with the positions I hold in a reporting company, if there aren’t any adjustments I can make to take advantage of earnings, and also if there aren’t any companies reporting which I would like to “play” on their earnings.

From my portfolio, in order of reporting:

GOOG – I already have 2 short puts, the newer position I actually just opened last week and already talked about in this post, so nothing to do here.

V – trading around 210$, my short puts only go into play at 130$, so 38% lower than today.. I probably wouldn’t play them, would rather wait to see if they go down towards 190 and then I would increase my position, but V is one of those stocks that always goes up and to the right, so it may be worthwhile to add an earnings play bc V has come down a bit along with the rest of the market last week.

FB – trading at 185, I opened my short 170$ put position after last earnings when FB lost the most market cap ever in history in 1 day. Currently its showing ~1000$ paper losses because FB has actually continued to go down since, but really the 3k$ the short put is worth is still all time premium.. Ideally I would rather be farther OTM, but for now I would just leave it, or depending on the prices open a ratio put spread for a net credit.

AAPL – I would prefer to have a bigger position but with the current market would leave it for now and wait to see where the market goes in the coming months.

AMZN – I have 2 short puts, 2 years out and 2 months out. The 2 months out put is protected by 6k + 4k$ of bear put spreads before it can go in the money, so I think I would leave that. In addition I have a assymetrical call butterfly (ACB) 3100-3150-3175 which seems likely it will expire worthless unless AMZN has amazing earnings. One possibility for an earnings play would be to add a lower ACB for example 2900-3000-3050 which would cost around 2500$. An expensive earnings play, could also go smaller, but also AMZN is trading close to its 52wk low and has historically bounced up from below the 2900 line. What I will do after earnings though is roll the 2 month put out to 2 years at a 2000$ strike (same as my other put), for a few thousand dollars credit (ideally 10k+$ if possible).

So overall, despite the shitty state of the market, my positions are relatively ok, and still room to increase position size if one of the companies moves badly against me.

With the VIX finishing last week above 25, and add to that the increased volatility that earnings brings, I could see doing some earnings plays in a couple of companies, but I would wait to see what the market does at the beginning of the week, and I would only open the earnings position the day the company reports earnings and not before, because generally the companies will go along with the market until they report, so might as well give myself the highest chances of success.

Some potential companies for earnings plays could be: CAT, HOG, CMG, MCD, INTL. Obviously I will make a post about anything I actually do, so sign up to get my posts delivered to your mailbox in real time.

And one last thing if you got all the way here – please interact with me here. Do you have any earnings plays? Any questions? Any comments? Would love to hear from you, even its if just to say you got all the way here.

Lets have a great week!

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