****MY TRADING JOURNAL****

Here we go. I have been investing and educating myself on investing and options since 2008. I have made a good amount of money since 08. Time to start a trading journal. Got burned on Apple's earnings and am going to implement a strategy to make some money back with a couple less risky plays that should guarantee profit as long as these stocks move enough in either direction.

First Earning Play is on Amazon.com. Amazon releases Quarter 2 earnings after market close today (7/26).

Going to implement a strangle with Amazon.com (AMZN). I have been following AMZN for years now. If AMZN misses earnings its stock will go well below $200. If AMZN beats earnings it should test its all time high in the $240 range. AMZN moves heavily after earnings announcements. I made a nice profit from buying OTM calls last quarter on AMZN before they released their earnings that beat expectations.

Last quarter I took on a lot more risk because I was only holding calls going into earnings. Worked flawlessly for me but here I want less risk to guarantee some kind of a profit as long as AMZN moves which I know it will.

Trade

Buy To Open AMZN Aug 18 '12 $205 Put (15 Contracts)

Buy To Open AMZN Aug 18 '12 $225 Call (15 Contracts)

My Next Earning Play is on Facebook (FB)

I really don't see any way that Facebook delivers an earnings surprise. I could be wrong but I have a hard time believing FB can generate over $1 Bil in revenue. I think there is more of a chance of beating EPS estimates but not sure about revenues. In my opinion Zuckerberg is a clown with little business savvy. I am going to implement a straddle with FB with ITM puts and OTM calls.

Trade

Buy To Open FB Aug 18 '12 $32 Put (15 Contracts)

Buy To Open FB Aug 18 '12 $32 Call (15 Contracts) 


Overall, for Q2 I think it is somewhere around 75% of businesses have missed estimates. I am pretty bearish in the short term for our market. I also think FB will miss earnings. I think AMZN will continue its revenue growth and beat on EPS also. EPS is only .02 so shouldn't be very hard to beat that. Again, I could be wrong and that is why I am buying calls and puts for each trade. This way as long as the stocks move enough I will make a profit.

I will post my exact orders after I place them when the market opens today. Looking forward to making some money.



Also currently am holding

10 AAPL Sep 22 '12 $565 Puts at $19.95 a contract

I think after this miss Apple is going lower. I see it bottoming at $530. At the least I think Apple is going to $550 before it goes any higher. In May, Apple bottomed out at $530 before running up.

Current Exit strategy for these puts is when AAPL gets to $550 I will sell 5 contracts. I will hold onto the other 5 and see if it breaks $550 and try and let the other 5 run to $530.

If AAPL moves against me I am exiting at $585.

Today AAPL closed below its 10 and 50 day Simple Moving Averages (SMA). This is a bearish signal indicating the stock may go significantly lower. I think AAPL breaks $570 today.

Happy Trading/Investing Everybody


 

Facebook also releases earnings after market close today (7/26).

Now that I see FB is down $2 pre-market, if it opens in this price range I will change the straddle to $30 calls and puts.

Official Trades

Buy To Open - AMZN $230 Aug 18 Calls (15) $6.55
                  - AMZN $205 Aug 18 Puts (15) $5.30

Buy To Open - FB $30 Aug 18 Calls (15) $1.12
                  - FB $30 Aug 18 Puts (15) $3.60

Still Holding

AAPL $565 Sep 22 Puts (10) $19.95

On another note, Zynga, the business that makes games for facebook reported awful earnings for Q2.

I think this is more confirmation that FB will whiff on earnings and the stock will crash down to the $18-20 range. IMO facebook will bottom out around $18-20 maybe even as low as $15. I definitely don't see facebook having a positive earnings report when the market closes today.

FB is too dangerous.  As long as they have trouble making money from mobile users ... I'd stay away.

Cave. With the straddle I have implemented on Facebook, it is more of a bearish straddle. Buying puts is betting that the stock goes down. I bought ITM puts for Facebook. I will make more money if facebook misses earnings and goes down then I would if it surprised and went up. This is because I paid a higher price for the puts. I will lose less if Facebook goes down on the calls. Pretty much, I am betting on Facebook reporting bad earnings and going down. I will profit from this more.

But I can still profit if FB surprises and goes up also.

Facebook (FB) Bearish Straddle Update

Stockholders were not happy with facebook's earnings report. Facebook did reported EPS and Revenue in line with estimates. My bearish trade looks like it will work to perfection. Just as I expected in the after-market facebook sell off heavily. FB closed out today at 26.845 -2.495 (-8.5%). This already was good for the puts that I bought.

In the after market FB has now reached its all time low. It is at 23.97 -2.875 (-10.71%) in the after market as investors were not happy with the earnings report. This is just a beautiful trade thus far.

Plan - When market opens I will sell the 15 $30 calls for whatever I can get and net a small loss compared to the gains I will get from the $30 puts.

I plan on letting this baby ride until 20$. Once FB reaches $20 I will sell either some or all of the puts to net a profit.

If FB moves against me I will unload the puts at $25 to guarantee a profit.

Amazon Strangle

AMZN barely missed Q2 earnings estimates. It did however show revenue growth from last yr Q2 to this year. At first in the after market, AMZN went all the way down to $205. It is currently at 221.55 and set to open about 1.50 higher than it closed at.

This is going to be a tougher trade to make money off of as it looks like AMZN is not going to move huge like it usually does after earnings.

The fact that AMZN missed earnings and is trading at such a high P/E ratio still leaves me very bearish short term.

Strategy - It looks like AMZN is going to run up in the short term. I still think it is going down in the medium term. Depending on how AMZN moves will dictate what I do. If AMZN runs up today I will let most likely unload the puts and let the calls ride. If it goes down I will do the opposite.

This is going to be a more difficult trade to profit from because there doesn't look like there is going to be significant movement in either direction. If I straddled AMZN I would be in a better position right now.

I slightly changed my position today with the AMZN strangle.

Sell To Close - AMZN $230 Aug 18 Calls (15) for $5.80.

Net Loss $-1125.00

Buy To Open - AMZN $225 Aug 18 Calls (15) for $7.85

Should be a great day today!