First week of trading earnings: insights and lessons learned

I traded several earnings announcements this past week, including:

Overall I just about broke even, though my idea of using butterflies didn't work as well as I had hoped.

They just aren't wide enough; I can get much wider with Iron Condors or strangles (should I decide to try this undefined-risk trade ...)

Also their prices didn't seem to collapse as fast as the widely out-of-the-money options ... I had hoped that they would just be at least 15 or 20 percent lower priced on or near the opening, but that was too rare. I wound up just taking whatever small profit was there as soon as the market opened on these butterflies.

Also, the .16 delta Iron Condor for the high-priced AMZN was plenty profitable: I risked $350 to make $150 ... of which I took only $75, 6 minutes after the opening on Thursday ... that's over a 20 per cent return.

And I goofed and traded Paccar (PCAR) even though it doesn't have weekly options! I closed the position I had in my own account for a small loss but let this run in some other accounts I'm trading to see if I can get out for a profit early next week ...

Next week: GOOGL, CMG and CBOE, among others and I'll try applying these lessons to make a profit ...

I'll report back at week's end ...

Dancing with the one (NDX) that brung me, maybe?

I settled on the a.m. settled NDX trade earlier this year as the only trade I'd need to do. But the 4-day NDX p.m. settled one (at .08 short delta) is now 3 for 3 and should win in the 90% range or better, I think.

I tested one again this week, and an acid test it was, with the market sharply down Monday and Tuesday:

The down move finally paused on Wednesday and I should really have taken the trade off for 90% of its profit, but I missed that opportunity and just let it run through expiration Friday, where it expired worthless with plenty of room left (short 6400 puts; closed at 6527). Profit was $1176 on a risk of $13824: 8.5% for 4 days. Not bad!

Otherwise ... I closed out the /ES short positions after the market hit 2655 ... I thought that was enough of  a down move and I didn't want to lose $100 point when it started to go up. But I was early! I left $2000 on the table and it was down 17 again on Friday closing at 2632 ... so I certainly could have held on for a while longer.

It wasn't anything to do with Brexit, but AAPL:

Finally, the Golden Butterfly paid off handsomely:

Gold futures went nowhere after I put the trade on last Sunday evening ... Tastyworks still doesn't support Good 'Til Cancelled orders, which worked to my benefit on this one. I sold the spread for $10.20 and would have bought it back for $7.65 (1/4 of the credit for this kind of trade), but by the time I looked at it was down in the $5.50 range and I got it filled for $5.60, almost double what I was expecting.

Overall a great week for the good guys ... your $200,000 account was up another $15000!

More next week ...

NDX 2 and 0, SPX 1 and 1 ... futures mostly still winning; AAPL wipes out a millenial

Volatility calmed down a bit this week (the Vix was down, closing at 19.15). Our friend NDX:

... was still volatile enough to pay well ($4.38 on a 1-lot, with short strikes at 6475 and 7270) ... it never got near those short strikes and I held it to expiration today for its full $438.

On the S&P 500 I moved to SPY and just sold a strangle for "78 cents" way out wide ... and closed it a day early, just taking $68 of the $78 dollars I would have gotten on that one.

If these two trades really pay off 90% of the time, with "wide wings" I should be able to make a good living trading them (along with the once per month a.m. settled NDX trade) ... fingers crossed!

The futures trades I have on are mostly paying off, still, but they mostly don't have frequent enough expirations to use like the NDX and SPX trades we're trying ... but I'm leaving them on this week because they shouldn't be too troubled by....

Next week is the U.S. election, and with the Democrats all but sure to win the house and the market today only holding up a little bit at the end because of this:

Trump says 'I think we'll make a deal with China' on trade

But this was seen as just a transparent attempt to prop up the stock market before the election ... which gave me a chance to sell /ES futures contracts around 2722 when they bounced late in the day.

Everybody in the world is expecting the Democrats will take the House of Representatives this election, which will mean only one thing for the market:

I am thus staying out of the neutral trades this week and instead just sold futures contracts and a 'bear call spread' on SPX in the non-futures-capable accounts I am trading. (These return about 30% for the week all by themselves.)

Finally, AAPL told the world that they aren't going to report sales numbers anymore, and that was not popular:

Tim Knight reported that one millenial who's gotten used to putting everything into this trade got wiped out this time ...

Let's be prudent out there ... more next week!