It can seem a little counterintuitive at first, but what you are describing is a moderately bullish strategy, a bullish, or credit put spread. If you bought the $22 strike ANF puts today and sold the $23 strike ones, you would have ended up with a net credit of $X. To make money on that trade, you would want the stock to stay above $23, in which case both options would expire worthless and you'd keep the net credit.
In a credit put spread, your max gain is the net credit you receive up front, and your max loss is the spread between the strike prices; in a debit put spread, your max gain is the spread, and your max loss is the debit you paid up front.
I really love how you showed us how to set the exit up when you open because I had several I missed the boat on and lost or did not make as much, so I set this one at $2.50 as I was a little gun shy, and made a 49% return! I'll take it every time.
PATH beat on earnings and revenue, and forward guidance was basically inline with estimates, but the stock is down ~8% after hours. Holding and we'll see if it recovers before expiration.
ELF beat on earnings and revenue and is up double digits after hours. If that holds, we should have a shot at a decent exit tomorrow.
ANF up 27% now on a surprise earnings beat and raised outlook. Social data missed this one, and the fundamentals and technicals didn't help here either. Let's keep our position sizes small with these earnings trades, given the risk.
Do you really think ELF is going up after it being down for 30 days? I want to be cautious, maybe buy one after a bunch will expire worthless tomorrow.
We'll see, but ELF had positive double-digit moves after its last 4 earnings reports. And bear in mind that although it's down about 11% over the last month, it's up about 55% year to date.
I'm a bit confused . If bearish why sell the 22 ANF puts and buy the 23? Wouldn't it be the opposite if you're expecting the price to fall?
It can seem a little counterintuitive at first, but what you are describing is a moderately bullish strategy, a bullish, or credit put spread. If you bought the $22 strike ANF puts today and sold the $23 strike ones, you would have ended up with a net credit of $X. To make money on that trade, you would want the stock to stay above $23, in which case both options would expire worthless and you'd keep the net credit.
In a credit put spread, your max gain is the net credit you receive up front, and your max loss is the spread between the strike prices; in a debit put spread, your max gain is the spread, and your max loss is the debit you paid up front.
Out of the PATH call spread for a net credit of $2.80 today, for a gain of 37%.
Exited ELF at a net credit of $4.25 for a gain of 81%.
I really love how you showed us how to set the exit up when you open because I had several I missed the boat on and lost or did not make as much, so I set this one at $2.50 as I was a little gun shy, and made a 49% return! I'll take it every time.
Thanks, nice work.
PATH beat on earnings and revenue, and forward guidance was basically inline with estimates, but the stock is down ~8% after hours. Holding and we'll see if it recovers before expiration.
ELF beat on earnings and revenue and is up double digits after hours. If that holds, we should have a shot at a decent exit tomorrow.
ANF up 27% now on a surprise earnings beat and raised outlook. Social data missed this one, and the fundamentals and technicals didn't help here either. Let's keep our position sizes small with these earnings trades, given the risk.
PATH is filled, ANF waiting
Do you really think ELF is going up after it being down for 30 days? I want to be cautious, maybe buy one after a bunch will expire worthless tomorrow.
We'll see, but ELF had positive double-digit moves after its last 4 earnings reports. And bear in mind that although it's down about 11% over the last month, it's up about 55% year to date.