(DISCUSSION) sympathy plays

[Kim]

I'm opening this topic to discuss some potential sympathy plays.

I already know about C trades which we have done several times, as sympathy play to JPM and WFC.

Yesterday we could play PNRA which reports next week as sympathy play to CMG. PNRA usually reports few days after CMG so it should be a good play.

Please post your ideas here.

C, JPM, WFC
NFLX, CSTR
PNRA, CMG, YUM, SBUX
EXPE, PCLN
NTAP, CSCO
ANF, GPS
CIEN, FNSR

WYNN, LVS

[Guest tkast36]

TRIP, EXPE and PCLN.

[1440]

What do you mean by a sympathy play?

[Kim]

If a company within the same sector reports few days after another company (like C after JPM/WFC or PNRA after GMC) the stock can move in 'sympathy" to another stock if another stock has a strong move.

[Marco]

while I like that we're discussing this I would caution that for very closely correlated stocks the market prices that in to an extend. So for example C IV will drop a little after JPM and WFC reported as that event is out of the option now so if C doesn't move that day you are likely to lose some money due to IV dropping. However the effect is much smaller that C reporting (IV will drop more after they had their own no's) so in general I like these trades and like to hear about ideas. Just saying its not a free lunch.

[Rogers]

EXPE is reporting AC today.. Anyone looking to play a PCLN sympathy trade?

[cwelsh]

How about BIDU/GOOG

[gofoptiontrading]

How about BIDU/GOOG

Bidu has more relationship with other china stocks, like sina/renn ...... not really with goog.

[gofoptiontrading]

Hi Kim,

Today is expe er, I'm still thinking enter pcln's RIC or straggle, please advise.

Thanks

[Kim]

I think it should be a good play. If you have the funds, I would go with slightly OTM November strangle. Please let us know how it worked. In previous 2 cycles when EXPE made a large move, PCLN moved a lot too making this an excellent trade.

[srf335]

Looks like the PCLN trade is getting crowded - IV is up a bit and both the 555/575 and 550/570 NOV1 straddles have crept up 6-8% in the last 3 hours as the underlying has stayed pretty steady. Earnings aren't due for another couple of weeks. Will probably enter this one at the end of the day if it doesn't get too expensive.

[srf335]

Didn't enter this trade - got too expensive. Interesting to watch the IV spike on PCLN as EXPE IV dropped all day. I was thinking of this as a gamma play to enter at the end of the day and catch a move if EXPE moves tomorrow. Looks like this is a popular sympathy trade and I should have been thinking of this as an IV play and entered earlier.

Mid on the NOV1 550/570 strangle was at $15.90 (or better) this morning and was at $18.20 at the close.

The 555/575 was even better as the price moved down from around 565 earlier in the day - from $15.60 to $18.65 (almost 20% gain). The stock price didn't move a whole lot today.

This might be an anomaly, but I will definitely spend more time looking for sympathy trade candidates.

[gofoptiontrading]

I watched whole day for PCLN, all straggle trades i wanted to enter went up at least 10% . I set an order in the morning but didn't get in due to the gap is too big for bid/ask.

Kim, if the bid/ask is 17.30/18.1, what price you will put in?

[Rogers]

EXPE +5.44

PCLN +17.63

[srf335]

PCLN 550/570 strangle mid at $23+ at the open. This would definitely have been a cake and ice cream trade. Will have to add this to the list for next Q.

Edited October 26, 2012 by srf335

[gofoptiontrading]

I watched whole day for PCLN, all straggle trades i wanted to enter went up at least 10% . I set an order in the morning but didn't get in due to the gap is too big for bid/ask.

Kim, if the bid/ask is 17.30/18.1, what price you will put in?

my watch is from 17.5-->19(close yesterday) -->25.5 (open today), this one is great!

[tjlocke99]

Has anyone been following any of these sympathy trades anymore like the EXPE/PCLN?

 

Thanks!