Welcome Stockaholics!

We are a new and fast growing financial forum! Sign up for free and let's talk stocks!

  1. Do you want to help develop this community? We are looking for contributions from investors and traders like you! What stocks do you follow? What is hot right now? Sign up and get in on the ground floor of the newest, fastest growing financial forum!
    Dismiss Notice
  2. You will notice a live chat widget on the right. Click in to join us and lets hear about how you nailed that last UWTI trade!
    Dismiss Notice

Earnings trades gone bad.

Discussion in 'Trade Journals' started by Baggi, Dec 6, 2016.

  1. Baggi

    Baggi Active Member

    Joined:
    Apr 6, 2016
    Messages:
    655
    Likes Received:
    106
    Here I'm going to list my earnings trades gone bad. Meaning, short term trades I've made, the night of earnings, and the stock moved so far, that I decided not to take the trade off. Instead, I roll out in time, and up or down, to take in further credits and try and crawl back to even, or a profit.

    So far I've had several earnings trades go bad on me this last earnings cycle. In no particular order.

    HAL
    P
    UA
    FSLR
    ANF
    JD
    GME

    Of those, I've only gotten out of HAL and P. I'll list those costs and profits later.
     
    Value543 and T0rm3nted like this.
  2. T0rm3nted

    T0rm3nted Moderator
    Staff Member

    Joined:
    Apr 2, 2016
    Messages:
    4,823
    Likes Received:
    619
    Interesting thread. Just curious, why stick with a loser when you can probably make the money back elsewhere faster? I have this issue at times as well where I'll stick to a loser so that THAT SPECIFIC TRADE can become a winner (or smaller loser), meanwhile I could have easily taken the loss, moved that money somewhere else, and made 5x that loss back while trying to slowly grind that one trade back to even.

    Is your record of winning trades more important, or the amount of money/% increase of your portfolio more important?

    Please don't take this as an insult, because I do the same thing many times and I'm sure everyone else does as well. Just trying to see your thought process and make you think at the same time about your goals. (I enjoy when people do this to me as well).
     
  3. heyimsnuffles

    heyimsnuffles Active Member

    Joined:
    Nov 22, 2016
    Messages:
    460
    Likes Received:
    76
    I'm never good at betting on Earnings. Always seem to be on the wrong side lol
     
  4. Baggi

    Baggi Active Member

    Joined:
    Apr 6, 2016
    Messages:
    655
    Likes Received:
    106
    Good question. The short answer is, I haven't given it that much thought. The longer answer is, I just don't find that many trades. At least not yet.

    I started trading again in October of this year. Right now I have about 30% of my account being used. I have plenty of capital to enter new trades if I want to. Maybe if I get upwards of 80% of my money being held up, I might start ditching losing trades. But at the moment, I'd like to see how I do with losing trades. Can I bring them back to even, or winners? Some of these feel like winners once I get back to even.
     
  5. Baggi

    Baggi Active Member

    Joined:
    Apr 6, 2016
    Messages:
    655
    Likes Received:
    106
    Pandora is one of the companies listed above as an "Earnings trade gone wrong."

    I sold some puts in Pandora at $11.50 and the stock dropped to below that after earnings came out. I rolled them three times. The third time I rolled them down to $11.00. Here are the final numbers on Pandora. I'm not sure how they will format here, and maybe someone can help me with this in the future, but all of the costs include fee's and commissions for all of the rolls and the final closing order. So the total amount collected in the end includes all the expenses.


    Pandora.jpg
    As you can see, even with commissions and fees of around $36.00, I still came out $113 ahead.
     
  6. T0rm3nted

    T0rm3nted Moderator
    Staff Member

    Joined:
    Apr 2, 2016
    Messages:
    4,823
    Likes Received:
    619
    Fair enough. I only bring it up because I struggle with the same thing (not that it appears to be a struggle for you as much as a strategy). I'll give you an example. I was in DIS early this year, making an earnings play. Well, sort of a mid-term investment expecting it to go from $100 to $120. They hadn't missed earnings in 5 years, so I played through earnings and it dipped. I continued holding and holding saying to myself "this is disney, it will go back up", I left my money in there for like 2-3 months, and eventually just said screw it and took it out. That capital then made me a lot more money trading AMD, TWTR, KMI, etc. I guess if you have a lot of available funds, it's not really an issue though, as long as those missed earnings don't continue going down while you wait ;)
     
  7. Baggi

    Baggi Active Member

    Joined:
    Apr 6, 2016
    Messages:
    655
    Likes Received:
    106
    My second trade that I got out of after a bad earnings cycle was HAL, or Halliburton. Here is the final results of that trade. This was after 1 roll and I went inverted with my puts and calls and was able to close the underlying with the stock trading between my strikes.

    Halliburton.jpg
    This profit was a lot smaller than the previous one. But even with paying right around $12.25 in commission and fees, I still came out with almost $35.00 in profit. Sadly, not all of these will end up at a profit. Fortunately, the first two earnings trades gone bad did. We'll see how the others work out.
     
  8. Baggi

    Baggi Active Member

    Joined:
    Apr 6, 2016
    Messages:
    655
    Likes Received:
    106
    I also trade differently than you do, I suspect. I sell premium. There is time decay in options and I sell that time and volatility. After earnings it all goes poof, for the most part. Since there is no time left and the binary event of earnings has passed.

    Each time I roll out further into time, I take in a credit and increase the possibility of a max profit (Except in certain situations where the underlying has too little volatility).

    So, I have to actively manage the positions. I don't just hold onto something. It's not like I purchased stock and am just holding onto the stock for years and years and waiting for it to go back up. I'm only dealing with the options. Again, there are special circumstances where I might be put the stock if all intrinsic value is gone from the options, but otherwise, I never mess with the actual stock. Just the options.
     
    T0rm3nted likes this.
  9. Baggi

    Baggi Active Member

    Joined:
    Apr 6, 2016
    Messages:
    655
    Likes Received:
    106
    There's a possibility of getting rid of a couple of these this week.

    JD and GME both expire this week. However, both are at a loss and I don't see them falling enough this week (Although if the market falls they may fall with it). ANF though is right where I want it to be. If it stays above $15.00, I'll be done with it this week for sure. If it drops below $15.00 and stays there, then I'll end up rolling for another credit.

    Finally I have UAA and FSLR. UA changed it's symbol on me. If they continue to go up as they have, I may close them too. I've gotten pretty close in the last week to getting back to a scratch.

    I'm sure some of these will take a turn for the worse on me. So I'm not thinking everything will go my way. But if I can take one or more of these off this week, I'll be happy. Mostly because I think I'll be adding to this list this week as several of my sector trades haven't gone that well. We shall see.
     
  10. T0rm3nted

    T0rm3nted Moderator
    Staff Member

    Joined:
    Apr 2, 2016
    Messages:
    4,823
    Likes Received:
    619
    What was your position in GME? Just curious because I'm short Gamestop right now, as I think they are in for dark times ahead.
     
  11. Baggi

    Baggi Active Member

    Joined:
    Apr 6, 2016
    Messages:
    655
    Likes Received:
    106
    I am short the $25.00 call. So I'm $1.42 loss right now, which is $142.00.

    If it doesn't drop below $25.00 before this Friday, I'll try and look at rolling up to the January $26.00 call and see what happens. Haven't decided what I'm going to do yet. If I roll to the 26, I can collect a small credit and make it easier to get out. If I roll to the $25.00, I can collect a larger credit but take on more risk. So, not sure yet.
     
  12. Baggi

    Baggi Active Member

    Joined:
    Apr 6, 2016
    Messages:
    655
    Likes Received:
    106
    Had some high hopes that I'd get out of some of my positions this week. Was thinking at least one, but didn't end up getting out of any of them.

    I seriously screwed up with ANF (Ambercrombe and Fitch). I had a chance to get out at a scratch but thought it would expire this week at zero and I'd gain a little money. Sadly, it tanked and now I may be in this for months and months to come.

    If First Solar has a good week next week, I may get out of that. Under Armor, JD and Game Stop all are just sorta hanging around. Under Armor had a bad week for me, but hasn't made new lows (Yet). Game Stop still needs to turn around and start sinking.
     
  13. Baggi

    Baggi Active Member

    Joined:
    Apr 6, 2016
    Messages:
    655
    Likes Received:
    106
    Not much happening here. First Solar is looking good right now, I actually have a profit there but want to see if I can get more (Probably a mistake).

    JD and GME and likely to go either way on me.

    UAA and ANF are hurting me right now and going the wrong direction. I need a bounce in these underlyings in order to get out.
     
  14. Baggi

    Baggi Active Member

    Joined:
    Apr 6, 2016
    Messages:
    655
    Likes Received:
    106
    I got out of JD today for a small lose.

    JD.jpg

    I had a $10.00 gain in ANF not too long ago and didn't get out. Now its grown to a large loss. So I figured here is the opportunity to finally get out of JD at close to a scratch so I got out.
     
  15. Baggi

    Baggi Active Member

    Joined:
    Apr 6, 2016
    Messages:
    655
    Likes Received:
    106
    I got out of my First Solar (FSLR) trade today. I'm not sure how it worked out yet, I'll take a look when I'm home tonight. But I'm sure I took in a profit.

    That leaves me with 3 positions now.

    Under Armor (UAA)
    Abercrombie & Fitch (ANF)
    Game Stop (GME)

    At this point UAA and ANF aren't looking so hot. GME has a shot at me getting out soon.
     
  16. Baggi

    Baggi Active Member

    Joined:
    Apr 6, 2016
    Messages:
    655
    Likes Received:
    106
    Looks like I made some good money with FSLR. I didn't even realize it.

    FSLR.jpg
     
  17. Baggi

    Baggi Active Member

    Joined:
    Apr 6, 2016
    Messages:
    655
    Likes Received:
    106
    No idea what happened in Game Stop (GME) this morning, but now I can take this one off. Woot!

    This one became a $60-$80 winner (will have to look at the numbers at home later tonight).

    Now two earnings trades left. Under Armor and ANF.
     
  18. T0rm3nted

    T0rm3nted Moderator
    Staff Member

    Joined:
    Apr 2, 2016
    Messages:
    4,823
    Likes Received:
    619
    Apparently poor sales numbers and an analyst downgrade.
     
    Tiptopptrader likes this.
  19. Value543

    Value543 Active Member

    Joined:
    Apr 9, 2016
    Messages:
    144
    Likes Received:
    79
    Cool thread @Baggi thanks for sharing your results! I've always sucked at playing ERs. My biggest was a year ago, AMZN, which kept going up up & away following its ER. I played a BCS on what I thought was over extension to the upside. Ended up getting tagged out @ my 20% risk threshold, which significantly impacted my 2016 results...D'Oh!

    So I understand, you're selling in advance of the ER -- do you ever wait until after the ER and look for over extension to either side of the ER's move?
     
  20. Baggi

    Baggi Active Member

    Joined:
    Apr 6, 2016
    Messages:
    655
    Likes Received:
    106
    No, I try and play before the Earnings report when Vol is at it's highest and look for underlying with weekly options.

    I ended up getting out of GME with a $61.00 profit.

    That's 7 losers with 4 turned into winners, JD closed as a loser still (But with fees and everything it was still under $10.00) and I'm left with two.

    I'm not feeling too confident about my last two either. Under Armor is coming up on earnings here pretty soon and I really don't want to hold through earnings again. What to do. What to do.
     

Share This Page