One relaxing week in the heartland of France did more good for my portfolio than I’d expected. Though I knew the wine would be good, the company excellent, and the sites spectacular; I’m relieved the market pulled back strongly. The recent option plays I’ve written about have done surprisingly well and only regret not playing the positions more agressively:
It’s now time to move on to other dramas. Europe is still on vacation, for at least two more weeks I expect we’ll only see Press Release/Talking Head market conversation and very little “real” information. Even with the ECB bond buying, weakness is likely to prevail for the remainder of August. That’s my sceptical view, in any case. Italy might not be as bad as panicky investors are imagining. This article on VOX seems fairly written. The slide continues, though the Euro is showing surprising resilience.
I’m still holding the SPY Butterfly but have closed the other positions.
If you want to buy a nice pad in NY, let me know. Upper East Side, 2 blocks from the park, great kitchen!
I’ll be updating during the day, happy to be back!
Now that the political and PR campaigns have run their course, the EUR.USD pair looks set for a bit of a pullback. Eventual good news from the politicians in the US can only bring more pressure on the Euro.
I found an interesting argument related to MGM’s earnings and headline risk.
This blog (The Stock Sleuth) looks at the first quarter 10Q and points out that “the income statement will consolidate the earnings of MGM China”. And tries to imagine what impact that will have on the reported earnings when 65-70M of magical cash shows up. He’s bullish.He points out that there’s a 15% short float on MGM. (I think it’s closer to 17%)
Here’s an after earnings trade I like. Hopefully, over the next few weeks we’ll see some profit taking on a name which is overbought and with a MACD signal rolling over on the 5 day charts. In June $WYNN was at 130 and today touched 170. Earnings were very positive but well built-in. Expectations of strong earnings (which we saw yesterday) have been driving this stock.
Buy Aug 160 Puts and Sell Aug 155 Puts.
The trade will cost you about $1.90
Break even is 162.50.
Max Profit if $WYNN closes under 160 on the Aug 19th expiration.
The Volatility has pulled back after earnings though is still a bit high this morning (31% HV vs. 33% IV). I’m expecting the stock to meander and pull back a bit… I wanted to get in as close to 170 as possible.
I’ve always heard you should not fight the trend, but I couldn’t resist… This might be a long-shot but it felt right this morning.
The big trade yesterday was $GOOG . Up 12.77% ($67.50) to 596. There was a nice option trade with 1000, 580 calls passing. That trade netted over $1,000,000 today. The calls were way underpriced at about 10% premium… Yesterday, I was thinking there was so much positive expectation, that I’d stay away (or go contrarion…)
I’m still watching $SLV and $WYNN, both for different reasons: $SLV is seeing buyers return with uncertainty, $WYNN is overbought. The $WYNN options are expensive but it seems to be bumping up against strong resistance at 160. If you’re bearish or hoping for some pullback, one possibility would be a Aug 155/145 Put Vertical for about $3.00. Break even at 152. Earnings are July 18th.