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Home › Forums › Closed Trades › Scaling Calendars in BABA
I was going to wait until monday to put on this trade, but the move today requires me to go ahead and move on it.
Decent gap higher on earnings… nothing special, right in line with what the options were pricing in.
Today, however, the stock is a rocketship, going parabolic and breaking above a key resistance level at 95 which has been in place since May of last year.
Now when a high beta tech stock has a move like this, it tends to go higher but not at the same kind of moemntum… it’s more of a drift.
With that in mind, it’s time to put on some scaling calendars.
I’m going to start with the Sep/Oct 95 put calendars, and as BABA squeezes higher I’ll continue to add to the trade. So if we see 100 next week, I’ll add the 100 put calendar, and if we see 105 I’ll add the 105 put calendar. If the upside continues to get threatened, then I’ll either roll the 95 calendar higher or just buy a couple calls to flatten out the delta.
Best case is we see a touch more followthrough and then a range for about two weeks. Target is 25% return on risk.
IWO Premium Order Ticket | ||||
Type | Asset | Duration | Strike | C/P |
---|---|---|---|---|
STO | BABA | 16 Sep 16 | 95 | Put |
BTO | BABA | 21 Oct 16 | 95 | Put |
Total Debit: | 1.24 |
100 hasn’t been hit yet, but it’s close. We’ll probably add to this trade next week.
We’re getting a gift on some reversion as the whole market is taking a dump. BABA ran to 105 but took a round trip. You’re able to exit for profits on the original trade and any adds you took.
IWO Premium Order Ticket | ||||
Type | Asset | Duration | Strike | C/P |
---|---|---|---|---|
BTC | BABA | 16 Sep 16 | 95 | Put |
STC | BABA | 21 Oct 16 | 95 | Put |
Total Credit: | 1.57 |
26% ROI