We Dodged A Bullet, Right?


Excerpt from Blue Line Trading Oct 26 Weekend Update: 

We Dodged A Bullet, Right?

On October 22nd we passed on a PYPL Sell Signal because it was triggered right in front of earnings. After announcing earnings on Wednesday the stock ran up from a low of $94.77 pre-earnings to a close Friday of $107.19. We dodged a bullet, right?

Not so fast. Let's take a look at all of the "non-trades" from the past couple of weeks, trades that we passed on because they were coming right in front of earnings. (I used the usual at-the-money, next month options for comparisons.) 


Signals Not Taken Because of Pending Earnings

PRO Service (Hourly Price Bars)

AAL: Buy on Oct 22nd @ 28.15 - Currently: 30.86

Option: Nov 15th $28C @ 1.16 - Currently 2.81 = +142%


AAPL: Buy on Oct 18th @ 236.80 - Currently 246.50

Option: Nov 15th $235C @ 7.50 - Currently 13.45 = +79%


CAT: Buy on Oct 23rd @ 133.10 - Currently 139.75

Option: Nov 15th $134C @ 3.50 - Currently 6.60 = +89%


LVS: Buy on Oct 21st @ 58.00 - Currently 61.22

Option: Nov 15th $58C @ 1.75 - Currently 3.55 = +103%


TSLA: Buy on Oct 22nd @ 257.30 - Currently 328.13

Option: Nov 15th $260C @ 13.60 - Currently 69.20 = +409%

PREMIUM Service (Daily Price Bars) 

AAPL: Buy on Oct 7th @ 227.00 - Currently 246.50

Option: Nov 15th $230C @ 6.90 - Currently 18.00c = +161%

MCD: Sell on Oct 14th @ 209.00 - Currently 194.61

Option: Nov 15th 210P @ 5.40 - Currently 15.45 = +186%

PYPL: Sell on Oct 22nd @ 97.36 - Currently 107.19

Option: Nov 15th 100P @ 2.75 - Currently 0.40 = -85%


The options above were chosen along the usual parameters, near the money next month calls or puts. Of the 8 trades, 6 were on the Long side so some of the success in these trades could do with the general upward momentum of the market. But that doesn't explain MCD which would have been close to a 200% winner on Short side and against the trend of the general market. 

The good news is that our methodology that is triggering signals like these is doing something right. In the case of pre-earnings signals it is doing a lot of something right.  In the future it's probably best to send out these signals and leave whether or not to take the trades to the individual trader. 

Sign-Up to either our Premium ($99/mo) or PRO ($249/mo) trading services and get next week's "non-trades" in front of earnings. Among companies reporting next week: GOOGL, SPOT, AMD, AAPL, FB, LYFT, TWLO, BABA, X. 

Join Blue Line Link