We're off to a fantastic start in our big earnings week with both IBM and GOOG giving us nice reports yesterday (Dave Fry's QQQ chart). I sent out an early Morning Alert to Members already on positioning our earnings plays and I even tweeted it, in case you are interested in a full review. Our IBM play from yesterday's Morning Alert for our $25,000 Portfolio (see virtual portfolio tab for all tracking) was slightly bullish, buying 5 of the July $190/200 bull call spreads for $5.25 ($2,625) and sell 3 March $200 calls for $2.60 ($780) and 3 July $180 puts for $4.70 ($1,410) for net $435 for the $2,500 worth of long spreads.
IBM is tracking $204 pre-market which means, so far, we can look forward to a full $2,500 on the bull call spreads with the short puts expiring worthless and owing the short callers, at the moment, 300 x $4 back for $1,200 so net $1,300 of our $2,500 potential realized if we flat-line here, but a lot can happen between now and March – and then to July so we're not sweating that one.
Our other earnings play for this morning was GOOG and that one was from the 17th:GOOG;/Itrade – Big deal on GOOG is going to be mobile search. Doubt there is much growth in desktops. Earnings are on the 22nd (next Tuesday) and don't forget Monday is a holiday so I kind of like the June $665/700 bull call spread at $21, selling the next week $725 calls for $15.50 for net $5.50 and the plan would be to roll those Tuesday (hopefully picking up some premium crush over the long weekend) and sell Feb calls to cover, hopefully for another $5 to make a net free spread. If GOOG has good earnings, we can deal with it by rolling and if GOOG has bad earnings, the caller goes worthless and it's a free(ish) spread and we can salvage what's left or sell puts and roll down if we think it bounces back. Let's do 3 of these in the $25KPA as it will be a good thing to follow along.
Savi asked in Member Chat yesterday if we should buy back the short calls and my response at the time was:GOOG/$25KPA, Savi –
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