GRPN Calendar - Hold thru earnings

[luxmon 228]

In keeping with the recent chatter of cheap calendar spreads:  With GRPN trading at $6.80, I picked up the 7 May8/May15 call calendar for $0.01 before the close to hold through earnings (yes, $0.01, small position).  I estimate it could be worth 0.18-0.20 if the stock sticks around $7 in the next few days and the money could be spent at the bar this weekend.  If not, I'll be staying home.

[Optrader 127]

This is speculation at its best

I will jump in tomorrow

But will pick the price that i am speculating as the target

Also e.g if 8 is my target then i will use calls so that if it expire out of money then i will save comissions

In tos if its below 5c then no comissions

[Kim 7,732]

I guess I could buy it at 0.01 sell at 0.05 and advertise 400% gain..

 

It's interesting that breakeven points after commissions are 5.80/8.50, so pretty wide range. The problem of course is that even for 1k position, you need 1,000 contracts. and with 1,000 contracts, you spend 1k plus 3k on commissions. But the gain can still be significant. Interesting setup.

[Kim 7,732]

This is speculation at its best

I will jump in tomorrow

But will pick the price that i am speculating as the target

Also e.g if 8 is my target then i will use calls so that if it expire out of money then i will save comissions

In tos if its below 5c then no comissions

They reported today, tomorrow will be too late to buy. 

[Optrader 127]

Yeah

May be next time or with some other cheap stock

i had played covered write once and it worked

But its too little return for the effort so gave up

Also holding period is more if stock tanks a lot and need some time to come back

[luxmon 228]

I guess I could buy it at 0.01 sell at 0.05 and advertise 400% gain..

 

It's interesting that breakeven points after commissions are 5.80/8.50, so pretty wide range. The problem of course is that even for 1k position, you need 1,000 contracts. and with 1,000 contracts, you spend 1k plus 3k on commissions. But the gain can still be significant. Interesting setup.

 

There is some pretty decent open interest on that strike for both expirations (~10k contracts), but you probably couldn't get that much done (I did a 20 lot).

 

I find it odd I even got filled on this spread and who would want to take the other side of it.  Maybe Karen the Supertrader read your blog and thought it wise to add some long gamma to her portfolio as a hedge.

[Optrader 127]

I guess I could buy it at 0.01 sell at 0.05 and advertise 400% gain..

It's interesting that breakeven points after commissions are 5.80/8.50, so pretty wide range. The problem of course is that even for 1k position, you need 1,000 contracts. and with 1,000 contracts, you spend 1k plus 3k on commissions. But the gain can still be significant. Interesting setup.

Looks like trade didnt workout

Thats how post earnings is

Your range analysis is true pre earnings

But post earnings things will be different

It had only 50c range in either side

[luxmon 228]

The earnings trade didn't work out as the odds makers predicted (~1:20), but I did end up taking some of Karen's money this morning as I unloaded the 7 May15 calls for 0.06.

 

On a 20 lot, the trade netted $78 after commissions, or 390% - one for the record books percentage-wise for me :-)

[Optrader 127]

That's good trade. Many things to learn from this trade. But again, I will start throwing some money at these post earnings trades, when I have plenty of money. May take few years though. But will keep this strategy/trade in mind .

[tjlocke99 18]

This isn't a typically hold through earnings trade as it only cost luxmon $.01 which even with GRPN's low price is still not much to lose.  Kim what was the downside to this?  Is the likelihood of reasonable returns that bad?