- Butterfly Nov 540/560/580 for $2
- Follow Mark on option profit (see following for full article)
- Bob Lang is doing a Weekly 535/550
- on 11/4, See a buyer of Ratio 1x2 of 525/ 550 weekly....315X 630
Mark's article:
When thinking about priceline.com(PCLN_) most people think about William Shatner and his ridiculous commercials (many may not know this but he actually owns a nice chunk of the stock he took in lieu of cash for doing the spots). To many investors it is the golden ticket for diversification in the travel industry. While just about every part of the industry is having problems there is speculation that AMR(AMR_) may go into restructuring, and the hotels aren't exactly lighting it up. That said, company like PCLN has been able to thrive as thrifty travelers, price conscious as ever are using this service more and more.
With the earnings after the close on Monday, the 30-day implied volatility of the options is approaching the highest levels I have seen in the stocks earnings in the last two years. Part of that could be the increased volatility we are seeing in the overall market place. when this company hits its IV high over since it became a 'hot trading stock' there will be good reason for it.
Check out the T3/OP video with Jill and Scott and what they are thinking into the print:
They are on the money with the earnings theme. Every big name has seen its stock move in reaction to earnings: Netflix(NFLX_), Amazon.com(AMZN_),Apple(AAPL_), Chipotle Mexican Grill(CMG_),Goldman Sachs(GS_). These are all names stock traders LOVE to trade. PCLN is about the only one left from the list of stock trader names.
With the vol run up, I think the stock is going to move and move hard. The November straddle is pricing in at least 60 points of movement between now and expiration, and that could be too little. Let's set up a call spread with a long inside the straddle price of 60 and sell a call outside the straddle. The hope being that we catch the move on the cheap. The 540/560 call spread has decent risk reward and accomplishes our inside/outside approach. More advanced traders might consider a butterfly set up around this spread as well.
Trades: Buy to open PCLN November 540 calls for $12.60 and sell to open PCLN November 560 calls at $8.00.
With the earnings after the close on Monday, the 30-day implied volatility of the options is approaching the highest levels I have seen in the stocks earnings in the last two years. Part of that could be the increased volatility we are seeing in the overall market place. when this company hits its IV high over since it became a 'hot trading stock' there will be good reason for it.
Check out the T3/OP video with Jill and Scott and what they are thinking into the print:
They are on the money with the earnings theme. Every big name has seen its stock move in reaction to earnings: Netflix(NFLX_), Amazon.com(AMZN_),Apple(AAPL_), Chipotle Mexican Grill(CMG_),Goldman Sachs(GS_). These are all names stock traders LOVE to trade. PCLN is about the only one left from the list of stock trader names.
With the vol run up, I think the stock is going to move and move hard. The November straddle is pricing in at least 60 points of movement between now and expiration, and that could be too little. Let's set up a call spread with a long inside the straddle price of 60 and sell a call outside the straddle. The hope being that we catch the move on the cheap. The 540/560 call spread has decent risk reward and accomplishes our inside/outside approach. More advanced traders might consider a butterfly set up around this spread as well.
Trades: Buy to open PCLN November 540 calls for $12.60 and sell to open PCLN November 560 calls at $8.00.
stock is hitting 474 ah....howeer, it quickly go back to 516. when the mkt open today in the morning, it keeps and run to 552. position looking really good as i did a 540/560/580
ReplyDeletegot out at 3.2. Was planning to sit longer but PCLN momo was losing and cut thru 540 while the mkt is stablize and actually up. Well, cant let profit run away
ReplyDelete