1/27/2013 Trading AMZN ahead of earnings (and GOOG, PCLN, SPY, AAPL)

Looking ahead this week, as far as my portfolio goes, the most significant event is AMZN earnings on Tuesday. Currently I have 4 calendar spreads working, I am long 2 of the Feb16 200 calls and 2 of the April 200 calls. Up pretty good on the Febs, but just a bit on the Aprils.

My plan is to liquidate the April calls and the shorts against them and 1 of the 2 Feb16 calls. My basis on that call is about $63 and I will stay short a Feb16 275 against it. This way I can stomach a fall to about $253 before I start losing money. Against this I plan to buy an April 265/240 BEAR put spread in case we get a pullback to below $250. In that case I will wait for things to settle out and then probably sell a BULL put spread down at the lower valuation.

As to other positions:

AAPL – still just trading horribly. But just as stocks don’t go up forever, a stock with a PE of 6-7 (forward earnings, back out the cash) growing at 20%., just can’t go down forever. Still the largest single position in my portfolio (ouch). Feel like giving up, but I know that feeling generally only appears around the time of a bottom. I think there is still a good chance that they will announce something and everyone will jump on board again all at once. This usually happens about 2 weeks after I sell the entire position. James Altucher just published a great article here. And if you can appreciate a bit of sarcasm, check out Bryan Goldberg’s piece from yesterday here.

GOOG – fast becoming my favorite trading vehicle. Moves well, but not huge in either direction (see AAPL). I have been doing well selling credit spreads with moves up or down. AND they have already reported earnings.

PCLN – plan to take a good chunk of my calendar spreads off this week. Almost straight-line move up on Friday. Report earnings tentatively on Feb 25th. Seems like a good time to buy a BEAR put spread or two out a few months and sell short term BULL credit put spreads against them

QLD – I own about 400 shares of this etf and am short the Feb16 62 calls against them. I think I am going to roll this 4 calls into the Feb16 55 (or even 50) calls as a hedge against a market pullback. If that happens I will start to nibble on the QQQs eventually replacing all of the QLD with the QQQ. I have quite a bit more SSO and SPY than I do the QQQs but I think that the Nasdaq will get popped harder in a pullback. I am also accumulating a little bit of QID (inverse QLD), TWM (double inverse IWM), SDS (double inverse SPY) and VXX (plain old volatility)

So to summarize; AMZN-thinking it will pull back short term. Selling most longs. AAPL-hoping it stabilizes but did buy some April BEAR put spreads on Friday. GOOG- staying with this name. PCLN-staying mostly long now but will divest by earnings

Good luck to all this week and  . . . . . Aloha!

 

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