Spring 2022 ER Season – Week 3 Summary

Week 3 of the Spring 2022 ER Season shows us how useful it is to have a plan in place prior to the week for exactly what will be in play. I spent the week at a tradeshow hobnobbing and in meetings 12 hours per day and out with customers for an additional 3 or four hours per night. I knew exactly what I wanted to trade and when based on a livestream session with the OptionsPlayers Swing Trading / ER Group on Monday evening, April 18th.

BX

We were already in two remaining BX Apr22 $120 calls purchased for $1.25 each (original position was four contracts, two of which were sold for 100% ROI). The plan was clear – hold the remaining position until just before earnings release on Thursday after market close.

Unfortunately, I fell victim to “impatience,” one of the seven deadly sins of trading and closed my position out early for $2.20 for a total of $440 position profit on an original risk of $500. Had I actually followed my plan, my profit would have been as noted below. Coulda, woulda, shoulda!

GD

We identified GD as in a strong upward momentum pattern. As such, we planned a call entry for Tuesday, April 19th. I often use the expression,

‘if I feel like I absolutely have to make a trade because a gun is at my back, I should step back and not make that trade.”

This was my second deadly sin of the week – forced trading/carelessness. The stock pattern was valid and clearly identified a high probability pattern as well as a line in the sand of where the prognosis was wrong. However, I did not look at GD options – they are illiquid.

On contract of GD Apr29 $252.50 call was bought for $2.25. Since then, GD price has invalidated the price action pattern. However, it is so illiquid that it is difficult to exit. As it is an “all-in” trade position sized to less than 2.5% of my account (my risk tolerance), I will hold until just before earnings and exit and hope that there is more liquidity.

Four earnings iron condors were identified for the week – IBM, PG, TSLA, and LRCX. Three corresponded to my risk tolerance of losing a maximum of 2.5% of my account – IBM, PG, and TSLA. IBM was a loser; PG and TSLA were nice wins. LRCX was also a winner, but was not entered.

IBM

PG

 

TSLA

Spring 2022 ER season continues to perform. Our $10,000 account is up over 12.7% in three weeks.  Next week’s plays have been forwarded to the Swing Trading / ER Group and were presented in a Live Stream on Sunday evening, April 24th. We have narrowed our focus to a total of 10 candidates in a field of over 150 stocks due to report this next week.

Performance to date:   

 

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