Friday, March 2, 2012

The $JOY trade and comments

update 5mar- Joy Global is down +$3 today im sure because of whatever the deal with china is, despite what company has already guided for next quarter..etc. Good example of how using a spread with plenty of time to opex you dont have to sweat the the day to day moves. yes its down, yes its closer to the short strike but there are 50days left till opex, alot can happen by then. no need to close for loss, let it sit there and let the percentages, support levels, etc work for you.

2mar -was looking for a test of the moving averages previously but then realized that earnings were at end of month so that nixed that..earnings out on 27th and stock pulled back again to near the moving averages..earnings looked good, growth rates, guidance increased, etc. so missing estimates by a penny or two it not important. this qualifies as a B.S. selloff to me. got the 5-6 point selloff on good numbers, the drop almost lines up to the moving averages. the clear level to shoot against is the 75ish level which was support from few months ago. Higher risk would have looked for a Mar 80 level short strike but i wanted to be as close to that 75 level as possible in case my premise is wrong on quality of earnings and/or any downgrades that might come with it.. so to give myself more time and more distance i :

Sold the Apr 72.50/75 credit put spreads at .36 x 15 for $540 credit.

This level allows for about at 12% drop and shows about an 85% probability of max profit using the Trademonster Analyse tab.

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