Tuesday 15 May 2012

Trades for the week of 14May to 20May

Option Trading
These stocks are historically volatile so it would be suitable to trade Straddles, Strangles, Guts or Reverse Iron Condors as earning plays . Please find out more at investopedia.com or optiontradingpedia.com if you do not understand options.
Trade 1: Strangle
Ralph Lauren (RL) announces earnings on May 22 Before market opens.
At a price of around $157, here is what I plan to do:
Buy a June 2012 OTM Call contract ($155)
Buy a June 2012 OTM Put contract ($160)
Both their IVs are around 40-50%, so it would be good to do a strangle.

Trade 2: Strangle
Tiffany (TIF) announces earnings on May 24 before market open
At a price of around $61.50, here is what I plan to do:
Buy a June 2012 OTM Call Contract (62.50)
Buy a June 2012 OTM Put Contract (60)
Its IV, in the 35-45% zone, is worth a trade

Trade 3: Straddle
AutoDesk (ADSK) announces earnings on MAY 17
At a price of around $35.90, here is what I plan to do:
Buy a June 2012 ITM Call Contract ($36)
Buy a June 2012 ITM Put Contract ($36)
This pairs' IV is around 40-50%, worth a trade too.

Stock Purchase: Walt Disney (DIS)
I have just noticed a cup and handle pattern in the chart of Walt Disney (DIS) and I am going to buy shares of Disney. Firstly, this company has been stable and have been providing people with entertainment for more than half a century. It has strong fundamentals and is this is the biggest, #1 company of its industry, Entertainment-Diversified. With Disneyland, its movies (the Avengers just earned 1B for the company) and its cartoons are still really well liked worldwide. As the world gets richer (generally), people that have money will seek entertainment by going to the movies. These companies in these industries, as long as they have films that people love and the right management (which I think Disney has-- ROE of 13%), will survive and thrive in the years to come.

As you can see, I am long term in some aspects (Stocks) and I also like some short term equities (Options). Although I am still using a Simulator, I will try to trade real cash after I am confident enough.

My first post, just some background info- Trading for around half a year, started getting exposed to options last month. Technical analysis 4 months ago. As you can see, I am not exactly experienced so this is just a point for further research, not any signal for one to buy the shares recommended. I plan on doing this weekly except during exams.

I dont know who will be reading this, but I suppose I am just writing this to myself. :)

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