A Week Of Wins (And One Loss)
Overall, a profitable week as we made money on a stock that went up and two stocks that went down. Details below.
Binyamin Mellish/Pexels.
Profiting From A Rising Homebuilder
Discussion with subscribers wary of holding long options positions for too long prompted me to set Good ‘Till Canceled limit orders to exit mine. One of those limit orders I set was on call options on Taylor Morrison Home Corporation ( TMHC 0.00%↑ ), the homebuilder I wrote about here last month:
Trade Alert: Betting On A Homebuilder
Binyamin Mellish/Pexels. Note: Unlocking this post as I just exited the position. Still bullish on this company, though, and may bet on it again in the future. Surprising Real Estate Data Mike Simonsen of Altos Data presented some surprising data in the video below on Monday.
In that post, I mentioned I had bought the $45 strike, October expiration calls on it at $1.55. I exited them today at $3.50 for a gain of $126%. I probably should have been more patient and greedier with this one as the stock is fundamentally and technically solid. I’ll keep an eye on it for another entry opportunity in the future.
I also exited a call spread on the same homebuilder, TMHC. I exited that one for a net credit of $1.70, or about a 14% gain. I left a lot of gains on the table with that one too by not waiting to sell it.
Trade Alert: Another Bet On A Homebuilder
Binyamin Mellish/Pexels. Still More Home Buyers Than Sellers At the end of last month, we placed a bet on a homebuilder based in part on its chart and fundamentals, as well as on the supply and demand characteristics of the housing market: You might think that, given the rise in mortgage rates over the last year, there would be more supply than demand, but it turns out that’s not the case. As [Altos Research founder Mark] Simonsen says in the video, supply is pretty tight, as fewer homeowners are selling now than in the past.
Profiting From A Sinking Bank
As I wrote here, I opened two put spreads on First Republic Bank ( FRC 0.00%↑ ) last week that expired today.
Trade Alert: Betting Against Another Bank
"You're thinking of this place all wrong, as if I had the money back in a safe. Your money's in Web3 innovations, it's in startups empowering women" —Delicious Tacos,riffing on the bank run scene in “It’s a Wonderful Life”. After The Acute Phase Of The Bank Crisis
I bought the $14 strike puts on it expiring on April 28th and sold the $13 strike puts expiring on the same date for a net debit of $0.55. I exited those for a net credit of $0.99 for a gain of 80%.
I also bought the $13.50 strike puts and selling the $13 strike puts expiring on April 28th for a net debit of $0.25. I exited those at $0.48 for a gain of 92%.
I opened an additional bet against FRC on Thursday, which I haven’t exited yet: I bought the $3 strike, July 21st expiration puts for $1.36. As it looks like FRC is headed to $0, we’ll probably get to exit those at close to the strike price for a nice gain.
Trade Alert: Another Bet Against A Bank
Binyamin Mellish/Pexels. Note: Unlocking this post, as the bottom just dropped out of First Republic Bank (FRC). Two More Trades I got these filled with limit orders placed before the market open, and it looks like you may get better prices on both of these now:
Our One Miss This Week
I placed two bets against an electric car company this week, one of which expires in July and one of which expired today.
Trade Alert: Betting Against An Electric Car Co.
Time Versus Time Decay Before I get to today’s trade, a note about what I’m trying to balance in general with options trades going forward. Namely, Allowing more time for fundamentals to play out. We got Bed Bath & Beyond ( ) right directionally earlier this year, and even
The one expiring today I placed by mistake; I thought today’s earnings release would be the company’s Q1, but it was their 2022 annual report filed separately from their Q4 release, which was filed last month. Since there was little new info, the stock didn’t move much, and our put spread (about a third the size of our other trades listed above) will expire worthless for a 100% loss (in dollar terms, this was a $120 loss).
Profiting From A Social Media Co. Crash
On Thursday, I opened a put spread expiring today (April 28th) buying the $10 strike put and selling the $9.50 strike put for a net debit of $0.22. I exited it today for net credit of $0.49, for a gain of 123%.
Trade Alert: Betting Against A Social Media Company
Note: since SNAP just released earnings, I’ve unlocked this post for free subscribers. SNAP is trading below $8.50 after hours now. Assuming SNAP stays below $9.50 tomorrow, as seems likely, we will collect the maximum gain on this trade. Betting Against Snap
Have a great weekend.