Thursday, January 28, 2016

Thursday's Agenda

Four symbols are on my desk this morning, all of them potential earnings plays: AAL, ABBV, CVX, MSFT. As I noted at the outset of the week, I'm limiting myself to five new positions in order to preserve capital for later earnings plays and to provide grater calendar diversification of my holdings.

ABBV is a pharmaceutical company, a sector in which I have had little luck because many of the moves are due to regulatory decisions that are beyond my ken as a trader. I'm passing on it without a full analysis.

CVX has come in this morning with implied volatility in the 57th percentile of its recent range. I prefer 66% and above -- the upper third -- so I'm passing on CVX as well, without further analysis.

That leaves two. AAL has the more granular strike prices with respect to the stock price, with an interval index of 40 (stock price/strike price interval). MSFT has an interval index of 21.

I'll analyze AAL first and MSFT second. I've placed four trades so far this week, out of the maximum of five that I'm allowing myself. Under the normal course of things, I would need to choose one or the other.

However, my FB position went wildly profitable after the company published earnings and I have exited, freeing up a slot.

And looking ahead to Friday, I have no prospective earning play. The one that came closest, HAIN, has insufficiently high open interest to meet my stands.

So if I like the cut of their jibs, I'll open positions on both.

-- Tim Bovee, Portland, Oregon, Jan. 28, 2016


Tradecraft: Playing the odds to build winning stock market trades from options, a description of how I trade, can be read here.


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Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.
No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.

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