Summer 2022 ER Season Plays
Break out week affected performance...
This past week was a very interesting week…
FOMC announced a 0.75% rate hike to 2.5%
GDP showed the US economy contracted by 0.9% in Q2 2022, crossing NBER’s threshold for an “official” recession.
PCE Index (FED’s preferred inflation measure) hit 6.8%, its highest level since 1982
Chairman Powell stated that the FED may slow down its pace of rate hikes in the future, which sparked a major rally in the last three days of the week from a market that was down roughly 1.2% at close on Tuesday.
S&P went up 9.8% in July, its biggest monthly gain since November 2020
I have heard some pundits state that if a recession is announced, the recession is already in the past. I am not a student of economics. Politicians, academics, and financial entertainers (on CNBC) alike can debate back and forth the official definition of recession or economic times of plight. All I care about are the charts in front of me and following tried and true methods of profitable trading. My focus is Earnings Releases on key equities defined by my research.
Let’s start by looking at the chart of the S&P…
The past week’s earnings plays were announced to premium subscribers of Green Goose Trader in the following post: Chip Shots and One Inch Putts (now unlocked for all free subscribers).
MMM Sold three MMM Jul29 $127/128/140/141 Iron Condors for $0.33 ($0.67 risk) on Monday. MMM gapped up and closed above both the short and long strikes. I exited the position EOD on Tuesday for a $0.30 loss per contract.
KO Shifted/confirmed its earnings for Tuesday before market open. This name has had good success in the past by using an Iron Butterfly. Sold three KO Jul29 $60/62/62/64 Iron Butterfly’s for $1.27 ($0.73 risk) on Monday EOD. KO initially traded in the profit zone - I had an order to buy back for $0.47 (100% ROI) that was never filled. I ended up buying the position back for break even towards the end of the day. Break even is Success.
NXPI Sold one NXPI Jul29 $157.50/160/185/190 Iron Condors for $0.78 ($172 risk). NXPI declined -0.19%. I exited the position EOD for a $40 profit. Success.
MSFT Sold one MSFT Jul29 $232.50/235/265/267/50 Iron Condors for $0.86 ($1.64 risk). MSFT gapped up and never really looked back. Took the full loss at $1.64. This is why position sizing is so critical. Losses happen. Failure.
ENPH Sold one ENPH Jul29 $192.50/$195/242.50/245 Iron Condors for $1.00 ($1.50 risk). ENPH had a major gap up and kept going. Took the full loss at $1.50. It is what it is. Failure.
LCRX Sold one LRCX Jul29 $235/240/495/500 Iron Condor for $1.35 (3.65 risk). This was a higher risk than I normally like to take. But no choice. LCRX had almost no movement and I took full profit. Success.
PFE Sold three PFE Jul29 $49/50/54/55 Iron condors for $0.24 ($0.76 risk). The stock stayed in the profit zone until expiry and I took full profit. Success.
MA Unconfirmed ER was scheduled for Thursday. Confirmed shifted to Wednesday. I didn’t enter (with regret) The stock didn’t move and the Iron Condor would have given full profit. Coulda, woulda shoulda…
VLO Same comment as for MA. That said, the liquidity of an Iron Condor was poor. Could, woulda, shoulda…
Pre-ER Directional Play:
FVRR Bought two FVRR Aug19 $35 calls for $2.55. In play with a planned exit on August 3rd before Earnings (BMO on August 4th). I have an order in to sell one contract for $5.10.
Courtesy of TomsOptionTools.
Last week was more difficult than most in my experience with ER plays. But the longer term performance is still within the norm. Long term stats help me through moments like these…
Here are the pre-planned plays for the coming week:
Keep reading with a 7-day free trial
Subscribe to Green Goose Trader to keep reading this post and get 7 days of free access to the full post archives.