Let's start with the premise:
FSLR is one high flying stock, who has a habbit of moving fast and furious after earnings. In addition, FED speaks on thursday, and we have a 3 day weekend. Knowing this in advance, helps me prepare for my trades.
The trade setup:
When FSLR made an impulse move down (*), that was the first sign the stock was done going down. Drawing a resistance trendline down from the previous highs gave me my entry point. Knowing earnings were just a few days later was also key to the trade.
The trade:
When FSLR broke above the down trend, I put in a bid for FEB 270 call @ .15. I was filled at (A), after the run the very next day, I drew a rising trendline. This helps me project where the top is. My exit was going to be the day before earnings. When the stock gapped up 2/12, the trendline was hit at (B), which gave me the exit signal. The volatility exploded, and I was able to get out at .60. The Result: 300%
The 2nd trade setup:
When I watched in disbelief as the stock dropped like a rock, I new there was a gap right around 173. Depending on how it acted once it got there, I would make a decision to buy or not.
The trade:
When FSLR hit 173 and bottomed, I bought a 230 call (C). Why 230 stike? It had the most open interest of any call strike for FEB, and after watching the call premium drop by 60%, I felt good about the trade. I got in at $1.35 near the end of day. Again, I waited for market open to see the reaction. It was up 30% premarket! I decided to do the same thing as last time, by holding for 1 day, and draw a trendline to project the tops. And on the next day, the stock jumped to over $230 per share at the open. That was the exit signal (D). The calls exploded to over $7 per contract. I sold the contract for $7.70. The result: 600%.
The 3rd trade setup:
I knew with only 1 trading day left, the options are dirt cheap. Having seen FSRL run from 170 to over 230, and knowing a gap was left at 210, AND knowing there was a 3 day weekend, AND the fed was speaking on thursday, I liked my chances of a pullback.
The trade:
I put in an order to buy FEB 210 puts shortly after my call was sold. I bid .40, and was hit within minutes. Within a few hours the options were up to 1.50, but I decided to hold on for 1 more day. I figured, if it hits 210, they would be worth more. By the end of the day, my puts were back down to .40! At the open the next day, the puts were down to .10, but I held to my conviction. Within 3 hours, the stock fell, with an impulse move down to 213 (E). That was close enough to 210 for me, so I exited the put position for $1.10. The result: 200%.
In my final trade, I learned that its best to get 1 stike closer than the target price. Time really eats away at the 210's since they were OTM. Had I picked up the 220 puts instead of the 210 puts, I would have paid $1, but they would have been worth $7, which would have net me 600%!
It was an amazing week...
Thanks for visiting.
tb
