Replies to post #21258 on Marketgems Earnings Trader- Trading Strong or Weak (MKTGEMS)

[jenna]

ADIC, NVDA, DELL and ADI straddles held for earnings. ADI and NVDA were milked before the report, DELL was barely traded, and ADIC had some anticipatory upswing yesterday but traded in a trading range today. The price for 10 contracts each of calls/puts were about as much as 1,000 shares of a 12 dollar stock. This is the suggested minimum if we do an equal weight straddle. ADI and NVDA had already hit our profit targets 'in anticipation' and that included upside in both the call options and the stock (no puts were called until late yesterday and today although they were planned)

ADIC looks like the winner here with -12% down edging out -7% down NVDA and upside for ADI +4.72% which might or might not last. DELL is as expected, no big deal in either direction.

These option strikes were changed as ADIC did not perform in "anticipatory upswing" as expected (not good for more than $0.50) For a serious call options we would have expected at least to see 18 in front of the report.



A light straddle suggested for DELL while "medium" straddles (about 75% of the usual position) for ADI and NVDA. ADIC was 'free' meaning it was cheap enough to go full strength and it looks like ADIC will be our downside winner for tomorrow. REMEMBER: Although we definitely play the EARNINGS REPORT, 75% or more of our gains are in the "anticipatory upswing" cycle and the POST reporting phase. The earnings play is a three-pronged strategy and to enjoy all the phases you have to MILK the play and not get by on just "I lika dis" and "I lika dat" and this stock is going to 'da moon'. There is a little bit more work involved but the end result is well worth the effort.

UPDATE ADIC (15 or 17.50 puts and some 17.50 calls(the calls were at a discount)

Wed Feb 11 14:45:09 2004: marketge - ADIC is dangerous..
Wed Feb 11 14:45:22 2004: marketge - it should come with a skull and crossbones warning because the p/e is 89.9
Wed Feb 11 15:34:22 2004: marketge - I would not leave home without the Feb 15 puts in ADIC..

Thu Feb 12 15:53:13 2004: marketge Msg:February 17.50 calls are $0.60 and the 17.50 puts are $0.85.. would be an okay play if ADIC moves over 1.50. March 17.50 puts would probably have been a good idea considering where ADIC might trade by the end of the month, but the premium was not really justified.

Thu Feb 12 15:53:24 2004: marketge Msg:in either direction.