Starbuck Earnings Trade Ideas for Less Than a Pumpkin Spice Latte

Written By: DragonFly Capital

psl


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Starbucks, $ SBUX, played out a bearish Shark harmonic for most of the first half of 2014. Reversing at the Potential Reversal Zone (PRZ) it retraced over 61.8% of the pattern before finding support and turning back higher. It is currently consolidating at 38.2% of that Shark retracement into the earnings report tonight after a strong move higher. A move higher out of consolidation would look for a full recovery of the drop on a Measured Move as shown in the chart below. Into earnings the Relative Strength Index (RSI) is rising and has moved into the bullish zone with the MACD rising. These support more upside, although do not guarantee it tonight.

There is support lower at 76 and 74 followed by 73 and 71 before 69.30 and 67.93. There is resistance higher at 77 and 78 followed by 79 and 80.60 before 81.50 and the previous high at 82.50. The reaction to the last 6 earnings reports has been a move of about 2.25% on average or $ 1.75 at current price levels, making for an expected range of 75.50 to 79.

The at-the money October 31 Expiry Straddles suggest a larger $ 2.35 move by Expiry tomorrow with Implied Volatility at 56% well above the November at 20%. Short interest is low at only 1%. Open interest favors the 75 to 76 strike this week, and sees some favoring to the Call side up to 78.

Starbucks, $ SBUX
sbux

Trade Idea 1: Buy the October 76/74 Put Spread for $ 0.25.
This is a good way to protect your current stock position against a pullback. Sell the weekly 80 Call as well to make it free.

Trade Idea 2: Buy the October 78/80 1×2 Call Spread for free.
This wins from 78 to 82. It takes margin and you should be ready to buy stock as a hedge if it moves over 80.

Trade Idea 3: Buy the October 77/75 1×2 Put Spread for $ 0.10
This plays the short term downside with a possible entry into the stock at 73 if it closes under 75. it uses margin for the extra short put.

Trade Idea 4: Buy the November 77.5/October 79 Call Diagonal for $ 1.00.
This is a longer term upside play that looks for concentrated open interest this week to keep it under the short Call Strike. If it jumps then it will require buying back that short Call tomorrow and selling a higher strike November Call to create a Call Spread in November.

Ideas like these come every day in the Dragonfly Capital Premium Service.

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The post Starbuck Earnings Trade Ideas for Less Than a Pumpkin Spice Latte appeared first on Dragonfly Capital.

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8 Ideas from the Prop Desk to Improve Your Trading (#Stocktoberfest)

This week I presented at #Stocktoberfest the @Stocktwits event masterminded by @howardlindzon.  My presentation was titled: 8 Ideas from the Prop Desk to Improve Your Trading.  Below are the slides and main ideas from my discussion.

Equanimity

Just intake the data the market is offering and then make the right decision- like Shark.  Don’t root.  If you do, then your trade results will not reflect how good you can be as a trader.

The Non-Scalable Trader

You must be right about direction, time and while controlling your risk/reward.

A Trader’s Treasure Hunt for Edge

There is a lot of good to be found Read more […]
SMB Capital – Trading Education

How to Trade Baidu for the Earnings Report

Written By: DragonFly Capital


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Sale Ends October 31st!


Baidu, $ BIDU, reports their earnings Wednesday night after the market close. Heading into the report the stock has been very stable, in a range between 210 and 230 for 3 months outside of a quick dip below when the broad market was at its weakest. Tuesday it looked like it might break that range. But Wednesday sees a pullback in the making. That pullback might stop at support at 221.30 or the bottom of the range. Below that there is support at 195 and 192 before 180. There is no resistance over the top of the range at 230. moving sideways with the MACD crossed and rising. These support an upside bias.

The reaction to the last 6 earnings reports has been a move of about 6.48% on average or $ 14.50 making for an expected range of 207.50 to 236.50. Short interest is low at only 1%.

The at-the money October 31 Weekly Expiry Straddles suggest a similar $ 13.70 move by Expiry Friday expected by options traders. The Implied Volatility at 92% is extremely elevated compared to the November Expiry contracts at 44%. Open interest is very smoothly spread out on both the Call and Put side. This gives no clues on a specific strike to focus on. But traders are putting on bearish 212.5/235 Risk Reversals, selling the 235 Calls to buy the 212.5 Puts, into the report. This could be a speculative play to the downside, but could also be a protection strategy for a long stock position. Either way it expresses a concern for a pullback.

Baidu, $ BIDU
bidu

Trade Idea 1: Buy the October 220/210 Put Spread for $ 3.80.
A straight directional bet for the downside. Not a great reward to risk, but good protection for long stock.

Trade Idea 2: Buy the October 220/210 1×2 Put Spread for $ 1.55.
A downside bet with margin used, that can offer an entry into the stock at 200 if it moves to 210 or below.

Trade Idea 3: Buy the October 222.50/230 1×2 Call Spread for free.
A no cost upside bet that uses margin. You should be ready to hedge this by buying stock if it moves above 230. I gives a profit from 222.50 to 237.50.

Trade Idea 4: Sell the October 210/235 Strangle for a $ 4.10 credit.
A bet that the current range holds to collect the full credit Friday.

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The post How to Trade Baidu for the Earnings Report appeared first on Dragonfly Capital.

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STTG Market Recap October 29, 2014

It was a generally quiet day for the markets, especially considering it was a Fed day which usually leads to a lot of volatility. Big picture, we’ve regained almost all of recent losses in the major indexes but stand short term overbought. A bit of rest would be healthy. The S&P 500 fell 0.14% and the NASDAQ 0.33%. The Fed statement was not as dovish as most expected as the…

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Earnings Trade Ideas for Facebook

Written By: DragonFly Capital

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Sale Ends October 31st!


Facebook, $ FB
fb

Facebook, $ FB, is testing the trendline at the top of a rising wedge into their earnings report after the close Tuesday. Shorter term it had a steep run higher off of the bottom of the wedge to new all-time highs. The Relative Strength Index (RSI) is bullish but slowing its rise with the MACD rising, supporting a move higher. There is support lower at 79.25 and 76 followed by 72.90 and 70.60 before 68.10. There is no resistance higher. The reaction to the last 6 earnings reports has been a move of about 9.65% on average or $ 7.85 making for an expected range of 73.15 to 88.85. The at-the money October Straddles suggest a smaller $ 5.95 move by Expiry Friday with Implied Volatility at 89% above the November at 44%. Short interest is low at 2%. Open interest favors the 80 Strike if it stays in this area and if it reacts well there is large open interest at the 85 Strike. A drop following earnings sees open interest spread out between 70 and 80.

Trade Idea 1: Buy the November 82.5/October 83 Call Diagonal for $ 1.02.

Trade Idea 2: Buy the November 14 80/85 Call Spread for $ 2.15.

Trade Idea 3: Sell the October/November 75 Put Calendar for a $ 0.68 credit.

Trade Idea 4: Buy the November 7 79/75 1×2 Put Spread for free.

#1 is straight directional upside play for the longer term. #2 is an alternative. #3 gives short term downside exposure looking for a bounce to follow. #4 gives downside but uses margin and offers a possible entry at 71.

Dragonfly Capital Views Anniversary Celebration

For a limited time the Opportunity to join the Dragonfly Capital Views Premium Membership on an Annual basis is available for only $ 618. And every new Annual or converted subscription gets a free copy of my book.

This is nearly 20% off of the standard annual subscription price and over 40% off of a rolling monthly membership! Plus you get my book. Don’t miss this limited opportunity! Sign up here.

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Most efficient medical record system for dogs and cats: paper

I took Mindy the Crippler, PC for her 12-week veterinary appointment today. The doc wrote everything down by hand on paper to be placed in a folder. I asked “Are electronic health records popular among vets?” She responded that vets used computer systems for reminders and recording vaccinations but generally not for the full health record. “It slows everything down too much [to use a computer],” she noted.

The vet world is mostly uninfluenced by insurance companies and government, so I’m wondering if the fact that computerized records apparently don’t yield net benefits in that domain should make us skeptical that they will pay off in human medicine.

[I might add that, unlike in human medicine, Mindy the Crippler, PC was seen on time and I was able to schedule follow-up visits on dates/times that were convenient for me. What did the vet get paid? Seventy-five dollars, which is about 1/6th as much as my doctor charges as a retail rate and almost exactly the same as my doctor gets paid for an exam (see previous posting about my $ 83 checkup). The vet might be more profitable because the $ 75 was collected with a simple credit card swipe.]

Philip Greenspun’s Weblog

Quick Color Structure V-Spike Update Oct 28

Let’s take a quick glance at the “Color Structure” of the S&P 500 on the V-Spike Reversal into Resistance and chart possible price pathways from here.

We’ll start with the V-Spike Reversal Pattern on the intraday color chart:

We’re seeing the Color Structure grid which quantifies swings in the market (and impulsive phases like the purple area).

We have a green upswing into the prior resistance price cluster near 1,980 and we’re watching this level extremely closely.

In simplest terms, the market should be traded cautiously/bearishly on a swing down against 1,980 and otherwise continuously bullish for yet another breakout and short-squeeze trigger above 1,980 (it would target 2,000 on a breakout).

The bigger picture reveals the larger trend structure:

The same swing logic applies to the Daily Chart in a persistent uptrend.

We do note the first clear “Lower High” into October and we’re on guard against a sudden reversal and formation of a “Lower High.”

A Lower Low followed by a Lower High would be two steps in a larger Trend Reversal… but we’re not there yet.

For now, we note the potential turn-down into 1,980 and if price continues to break resistance levels as its been doing, then 2,000 is the next target followed by 2,020 and beyond as the uptrend continues.

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter: http://twitter.com/afraidtotrade

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Afraid to Trade.com Blog

Top Trade Ideas for the Week October 27, 2014: Bonus Idea

Written By: DragonFly Capital


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Here is your Bonus Idea with links to the full Top Ten:

AIG, Ticker: $ AIG
aig

AIG, $ AIG, pulled back hard through the end of September and into October. it found a bottom at 48.75 in the middle of the month and started back higher. The RSI also bottomed then and is now pushing through the mid line with a MACD crossed up and rising, both supporting more upside price action. What makes it attractive now is that it is consolidating the initial move in a bull flag. The Measured Move out of the flag higher would take it to 55.25. There is resistance at 52.30 and 53.50 followed by 54.70 and 56 before the prior top at 56.56. Support lower comes at 51.50 and 50.50. Short interest is low at just over 1%.

Trade Idea 1: Buy the stock on a move over 52.30 with a stop at 51.50.

Trade Idea 2: Buy the November 52.50 Calls (offered at $ 1.12 late Friday) on the same trigger.

Trade Idea 3: Buy the November 52.50/55 Call Spread (88 cents).

Trade Idea 4: Buy the November 52.50/November 7 Expiry 53.50 call Diagonal (69 cents).

Trade Idea 5: Buy the November 48.5/52.5 bullish Risk Reversal (81 cents).

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If you like what you see sign up for more ideas and deeper analysis using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits feed and on chartly.

After reviewing over 1,000 charts, I have found some good setups for the week. These were selected and should be viewed in the context of the broad Market Macro picture reviewed Friday which, heading into the last week of October sees the equity markets have nearly fully recovered from the Droptoberfest™ selloff. Elsewhere look for Gold to resume its downtrend while Crude Oil consolidates with a bias to turns lower. The US Dollar Index remains strong but digesting its recent gains while US Treasuries are biased lower. The Shanghai Composite seems to be in short term pullback mode while Emerging Markets consolidate in the downturn with signs of a possible reversal higher. Volatility looks to to have settled back into the lower range putting the wind at the back of the equity index ETF’s SPY, IWM and QQQ. Their charts showed great strength last week and no reason for it to stop next week. Use this information as you prepare for the coming week and trad’em well.

Dragonfly Capital Views Anniversary Celebration

For a limited time the Opportunity to join the Dragonfly Capital Views Premium Membership on an Annual basis is available for only $ 618. And every new Annual or converted subscription gets a free copy of my book.

This is nearly 20% off of the standard annual subscription price and over 40% off of a rolling monthly membership! Plus you get my book. Don’t miss this limited opportunity! Sign up here.  Sale ends October 30th.

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The Weekend Trader – Thanks & Resources

Yes, it’s been a while as I focus this morning on resetting my own trading business and thank several traders including Linda Raschke, eminiplayer, and futurestrader71 for their direct and indirect support and insights as we work independently and together to further strengthen the trading community.

Other links I reference include futurestrader71′s outstanding presentation on Pro Trading Environments, as well as his site’s link to the Phantom of the Pits series which is a must- must- read if you’ve never done so before.

I also discuss two cosmetic changes I would make to “Chronicles …” if I had to do things over again, including the cover and subtitle.

My sincere thanks and best wishes to all of you as we continue our respective journeys.

Don Miller’s S&P Trading Tank

STTG Market Recap October 24, 2014

Indexes finished off their best week of 2014 with another solid gain despite quite overbought conditions. The S&P 500 lurched forward 0.71% and the NASDAQ 0.69%. We are now up 5% since St Louis Fed President James Bullard said the Fed should consider delaying the end of quantitative easing on October 16th. Earnings continue to be the focus of the market, but we did have a new…

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