Week 3 of the Spring 2022 ER Season shows us how useful it is to have a plan in place prior to the week for exactly what will be in play. I spent the week at a tradeshow in Singapore hobnobbing and in meetings 12 hours per day and out with customers for an additional 3 or 4 hours per night. I knew exactly what I wanted to trade and when to enter those trades. This was based on a livestream session with the OptionsPlayers Swing Trading / ER Group on Monday evening, April 18th.
BX
We were already in two remaining BX Apr22 $120 calls purchased for $1.25 each (original position was four contracts, two of which were sold for 100% ROI). The plan was clear - hold the remaining position until just before earnings release on Thursday after market close.
Unfortunately, I fell victim to “impatience,” one of the seven deadly sins of trading and closed my position out early for $2.20 for a total of $440 position profit on an original risk of $500. Had I actually followed my plan, my profit would have been as noted below. Coulda, woulda, shoulda!
GD
We identified GD as in a strong upward momentum pattern. As such, we planned a call entry for Tuesday, April 19th. I often use the expression{
“if I feel like I absolutely have to make a trade because a gun is at my back, I should step back and not make that trade.”
This was my second deadly sin of the week - forced trading/carelessness. The stock pattern was valid and clearly identified a high probability pattern as well as a line in the sand of where the prognosis was wrong. However, I did not look at GD options - they are illiquid.
On contract of GD Apr29 $252.50 call was bought for $2.25. Since then, GD price has invalidated the price action pattern. However, it is so illiquid that it is difficult to exit. As it is an “all-in” trade position sized to less than 2.5% of my ER Strategy account (my risk tolerance), I will hold until just before earnings and exit in the hope that there is more liquidity and a bump in IV.
Four earnings iron condors were identified for the week - IBM, PG, TSLA, and LRCX. Three corresponded to my risk tolerance of losing a maximum of 2.5% of my account - IBM, PG, and TSLA. IBM was a loser; PG and TSLA were nice wins. LRCX was also a winner, but was not entered.
IBM
PG
TSLA
Spring 2022 ER season continues to perform. Our $10,000 account is up over 12.7% in three weeks. Next weeks plays have been forwarded to the Swing Trading / ER Group They were also presented in a Live Stream on Sunday evening, April 24th. We have narrowed our focus to a total of 10 candidates in a field of over 150 stocks due to report this next week.
Performance to date:
Comments on this post are welcome!