Keene: Options Strategy – Buying the Tiffany (TIF) December 70-77.50-85 Call Fly for $1.80

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Keene: Options Strategy – Buying the Tiffany (TIF) December 70-77.50-85 Call Fly for $1.80 by Andrew Keene | This entry was posted on Monday, November 28th, 2011 and filed under Stock Market Comments Off

Breakdown: I bought the TIF December 70-77.5-85 Call Fly for $1.80.

Profitable – I make money on this trade if TIF closes between $71.80-$83.20 by December 16, 2011.

Break-even – I break-even on this trade if TIF closes at $71.80 or $83.20 by December 16, 2011.

Unprofitable – If TIF closes under $71.80 or above $83.20, this trade will be unprofitable. The most I can lose is the amount I paid for the spread, $1.80.

The reason I like this trade: Tiffany has earnings before the bell tomorrow and I have been bullish for the last couple of days and I continue to think the stock market is oversold. I actually put this position on last week and I think that Tiffany will have good earnings, but I do not want to risk that much in case the stock moves than expected. I am risking $1.80 to potentially make $7.50, so I think it is great risk vs reward. I think that if Tiffany has good earnings, then it can hold the $70 level, but I do not think it will surpass the $80 level. This is why I picked these strikes and this position. Please feel free to email me with any questions regarding this trade at Andrew@KeeneOnTheMarket.com.

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CMHTraders

(Thursday, May 10. 2012 11:16 AM)

No one jumping the bids today… so no sense of excitement. From the sell side you see large block orders come in on the limit and sellers can’t front run them fast enough. A lot of it might have to do with the punishment that has been doled out to any stock who even thought about posting a weak guidance. Seeing high PE stocks that were the next “it” taken to the wood shed to be slaughter for 50% in a day shows how bloated we were at the top. This is not remotely the market I pictured today. After such a sound beating one would think bulls would be value hunting. The only stocks show relative strength are the market leaders with low PE’s… and even they aren’t up big. This price action makes me think that 1343 was just a support breach, not a firm bottom that one could trade against.

[reply]

Michael Kudrna

(Wednesday, May 9. 2012 12:35 PM)

For CMHTraders – I’m prepared this summer for bad trading and keeping higher levels of cash than usual. Europe situation as you noted and the fear of another US Debt Downgrade/Debt struggles, among others.

[reply]

CMHTraders

(Wednesday, May 9. 2012 8:29 AM)

Remember a few years ago? The Euro currency gets pounded and our markets nosedive? The Euro rallies and we shoot up? Looks like that trade is reemerging with vengeance. The Euro is FIRMLY weaker here….

[reply]

CMHTraders

(Wednesday, May 9. 2012 8:18 AM)

AAPL/AMZN: I was able to cover my AMZN short near the lows yesterday and enjoy a rebound towards the close into which I re-initiated the short. This trade is acting more as a hedge against AAPL than a true pairs trade but I still stand by the thesis. These are the only two positions that I have on pre market.

[reply]

CMHTraders

(Wednesday, May 9. 2012 8:11 AM)

Euro back in the headlines. We really don’t have any of our own macro data to dig us out of the whole so buyers will have to step up to reverse the loss. Yesterday we got a turn after lunch. I wouldn’t look for that turn today if the markets violate yesterday’s lows. Bonds are approaching record highs… The problem is that indicator has diverged so much it’s tough to call a top. We were trading at these levels back in September but the market and volatility was infinitely higher. Should the market return to those levels both on a volatility level and absolute value level where are bonds supposed to go? Zero? The 10 year is already trading below inflation rate…. I wouldn’t listen too much to the chatter about bonds MUST come down. Some of the twits saying that are the same ones saying that there must be more QE. Which is akin to having your cake and eating it too.

[reply]

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