Trading After Amazon Earnings

On Thursday, after the market close Amazon reported their fourth quarter earnings. They beat their earnings expectation, but due to increase expenses as stated on the conference call, and drove the price down largely. It attempted to make her early recovering, but just think further and further.

Like last year, when Amazon and Google disappointed on their earnings, the whole market came down. It is extremely important to make sure that you get out of your trade in a timely fashion. When you get too greedy, you end up losing more than you gained.

I got out of my puts on Alphabet missing the right time and
costing me $600 on Thursday. I didn't make the same mistake today which was very important because it was the day of expiration. I did make money on alphabet 1130 calls, but lost a little too much on a 1135 call that I didn't sell promptly.

Alphabet's normal trading on Fridays consist of going up sharply, retracing down near the low the day, going back up and falling short of where it peaked earlier, and going down for most of the rest of the day. Very good money can be made with puts and decent money can be made with calls on Fridays as long as your problems with your execution and don't fall in love with your holdings.

From my chart above you can see where I recommend positions. This is the typical movement of Alphabet on a Friday, but the past 3 out of 4 weeks it has not moved in the typical pattern.

Then there was Tesla. After reporting fourth quarter earnings on Wednesday afternoon, we didn't get a big movement in either direction. I believe it would have fallen further if Tesla reported a loss in the 4th quarter of 2018. Since Tesla reported a slightly lower than expected profit and already came down so sharply in the prior week, it should back up to trade above 330 next week. I bought 2 315 February 8 calls on Tesla within the first few minutes of Fridays open.

I don't like holding options over night because you don't know what will happen by the next day let alone after a weekend. Typically you can buy the same calls on Monday unless Tesla opens considerably higher. Hopefully I can benefit from Tesla running up to 330 early Monday morning and I can sell then.

On Thursday morning, when I saw that Tesla was not going down, I decided to sell a covered 3/1/19 Put with a 280 strike price for $800. I picked that strike price because it bounced off 280 at the bottom of the most recent drop before the earnings release. Therefore I expect it to go up and this option expire worthless on March 1st, but if it does go down by then even in a larger market decline the level of 280 should hold for Tesla. I found this strategy makes more sense than being subject to risk of holding on the stock.

I got fed up with UGAZ and it's strange movement that don't make sense. I did find that Antero Resources Corporation (AR) does make sense as it is a company in the Natural Gas field with positive earnings and does have options available on it. AR his a 5 year low on Thursday below 10 and it bounced when UGAZ didn't. UGAZ went down further on Friday, but AR went up. When AR was at 10.21 on Friday, I sold 5 3/15/19 10 strike Puts. I might decided to buy this stock also, but at this point I feel I can make a high probability profit even if it doesn't go much higher by expiration.

I had been following someone on YouTube recently who discusses options trades, but I have found him making some dumb errors that didn't make sense. I am not saying that I am an expert, but to sell an out of the money naked call option 5 months out on Boeing the day before earnings has to be the dumbest move I have ever seen. There is a possibility that it goes down and he might be able to buy it back slightly over what he received on it. There is a probability that Boeing blows through that 400 strike price before the next earnings call, especially if there is a trade deal done, but definitely by their next earnings report.

This year is starting to look like last year in terms of the market movement, but this year is quite different. Last year the market had a large amount of volatility due to over inflated market after the next tax bill was passed, companies wrote off more expenses in the fourth quarter of 2017 to take advantage of the higher tax break, emerging markets were declining, new Fed Chairman Powell starting moving interest rates too quickly and trade tariffs were affecting everyone when nobody was expecting them at all.

This year is different because the Fed chairman has learned how to talk without disrupting the stock market, we might be getting closer to a trade agreement, and consumers are about to experience some of the largest tax refunds ever. Amazon's warning of higher expenses might have spooked investors Thursday and Friday, but it is the same thing that Google did last year when everything reversed course. It was pointed out on CNBC's Options Action on Friday that Alphabet appears to be in a head and shoulders pattern, but you could say that about so many companies that I broken out after hitting a 52 week low and bounced to move sharply up. Typically these 52 week lows have been 50% of their all time highs. Alphabet is the one FANG member with probably the highest diversity along with the lowest growth movement. I don't see Alphabet moving more than 100 points lower, but I also don't see that coming until it have moved 300 points higher.

Tesla or Bust

Elon Musk of Tesla makes for some interesting news. Last Thursday after the market closed, the SEC had a conference that they were filing a lawsuit against Elon Musk for market manipulation with his Tweet on August 7th when he stated that he is considering taking the company private at $420/share. From that Tweet the stock shot up from 340 to 380 that afternoon. I said it when it happened that it doesn't make sense and he will have legal problems that will probably include jail time if it doesn't go through.

A couple of weeks later Musk Tweeted that he would not take the company private because so many people would prefer he did not. The stock went down to 252 and bounced to make it to 318. Once the SEC made there announcement, Tesla's stock fell hard after hours and finished last Friday at 362. We learned that the SEC offered a settlement to Musk who refused it. Over the weekend we learned that Musk and Tesla made the settlement deal and the stock erased Friday's drop completely.

After erasing Friday's drop, Tuesday Tesla announced their delivery numbers which were a huge increase from past performance. Tesla's stock moved up at open and moved down for the rest of the day. Then today we found that Musk threatened the board not to make the deal or he would quit. Tesla's stock has continued to move down on Wednesday and bottomed for the day around 292.

What we have learned is that when Tesla is down real low on Friday, buy a Call Option for the next week and you will be happy by Monday afternoon. Next up for Tesla will be their earnings report. If they turned a profit in the third quarter of 2018, we might see Tesla hit that $420/share mark.

Thursday and Friday Market Movement

This past week was a busy week for the end of August. Amazon is still moving to new highs along with Apple despite Netflix cutting off the Apple Store's cut of Netflix subscriptions. There are still more tariff talks as we ironed out a deal with Mexico, Canada is pushing for a deal next. Tesla has continued to move down as Elon Musk has left the headlines and other auto manufacturers are entering the electric auto space. 

Alphabet (GOOGL) had a nice move up this past week. It peaked out around 1269 which was a surprise that it went up on Thursday given that it started the day down. It fell back to 1260, came back up to 1266 and was in free fall mode until 2pm on Friday. I bought 3 1260 Puts on when it was at 1265 and sold it too soon at 1258. If I sold them on Friday at the low of 1225, I would have multiplied my money by 7. 

So that sounds good and you might say let's do that the next time it goes up. Typically Alphabet has a great week ending with a fall in the last day and a half. The next week it starts down with a bottom found on Monday. The bottom is retested on Tuesday and again on Wednesday. By 2pm on Wednesday the bottom is in and you could feel comfortable buying Calls for the end of the week. If the move is huge on Thursday without a pull back, Friday could be a similar sell off day. If Friday is an up day, buy Call options for the next week. If it is not an up day, buy Call options near the bottom at the end of the day.

Given how much Apple has run and their new iPhone announcement, I would expect to see it pull back some before moving higher. I am looking for it to come down to 222 before buying Call Options a week or two out.

Profit from Ups and Downs of the Market

I have not posted anything in a week as I tried a different method to trade that didn't work. I felt that Alphabet (GOOGL) came off of the bottom last Friday and was going up starting Monday. It went up to 1224 and down from there. It didn't go as low as Friday's low of 1204, but did have a nice run up. I decided to hold on my options for a couple of days because I felt that it was going to 1240 and would open higher by 10 on its way.

Tuesday came and it ran up to 1232 and fell from there never to return until today. When it ran up to its peak on Tuesday, the S&P 500 index was about to pass the all time high from January. Alphabet's indicators were at the very top for over a half hour which indicates that it would probably go down. I expected a small drop followed by a push higher. I was wrong. As Tuesday ended, everything fell going into the close with the Trump associates guilty rulings.

On Wednesday Alphabet opened around 1215, ran up to 1226 and fell to 1218 never passing 1223 in the afternoon. I sold my Call Options that I held since Monday for slightly less than I bought them for although the stock price was 10 higher than when I bought the options. This is why I don't like holding options over night and you should expect to have them sold in less than 45 minutes unless holding on to longer dated options.

If I had not been tied up with the Alphabet options I would have taken advantage of lower cost options for stocks that came off of a recent peak that were due to go higher for example:

• Spotify was 194, came down to 185 and today is back above 191.
• Roku was near 60, came down to 55, now back to 62
• Apple was near 218 on Friday, came down to 214, and now back to 216.

Nvidia fell last Friday from the disappointing earnings report due to only receiving $18 million instead of $100 million from crypto currency mining. It tried to recover Friday before falling back to the after hours low of 242. This week it has run up to an all time high of 269. This is a stock that is strong, but streaky. I have tried to trade options on it before with such small success.

Tesla might have turned a corner as "the most shorted stock in the history of the market" according to Elon Musk. The reports of Musk health concerns drove Tesla's stock down from 305 to 283 in premarket trading on Monday. It opened around 290 and finished the day at 308. From there it has moved up to 327, but has stayed around 321. Tesla has positive news for deliveries and negative news about a car hitting an object then catching on fire. This week it is stayed consistent.

Outside the initial movement in the morning, there is not a lot of movement as it appears that the market is waiting for something. Tariff news is increasing with more planned tariffs on China and anticipation for a meeting with the leaders of China to work out a trade agreement. One thing is sure is it could take an hour for a stock to peak and in 20 minutes go back to where it started. 

Day trading this market can still make a lot of money as long as you know your stock. Alphabet (GOOGL) typically moves 10 to 12 from the prior close or the morning open. It goes up and down that far. Home Depot, Best Buy and Apple have moved 2 to 4 points in either direction each day. With the stagnate market this feels similar to a type of bear market beginning. As we come to the end of the 2nd quarter earning reports, we might see more of the same. Maybe not as Amazon came close to hitting another all time high this morning. 

Friday Pull Back to Profit

Amazon and other tech companies were up big this week and today was not much different than other Friday's where they would give back some of the gains for the week. Alphabet (GOOGL) ended slightly lower than where it ended last week. I would expect more give back on Monday.

LEARNING LESSON: On a down day, take your profit and look for another opportunity to take a profit in the same direction. Don't get excited about it changing directions completely as that doesn't happen often and many times it just returns to where it starts.




Tesla had some after hours movement Thursday from news that the board will pursue hiring a financial analyst to determine the valuation of the company to move the process forward for Elon Musk desire to make Tesla private. By open Friday it gave back the after hour gains and then some, but did charge higher and ultimately ended the day even.

LEARNING LESSON: Try to avoid after hours momentum as it can be reversed the next day and is often wrong. Instead look to buy at the best price during open trading market hours.

Example: Sunrun was driven down below $12/share after reporting earnings Thursday afternoon. It finished after hours trading around $12.67. It fell to $11.80 after open Friday morning and moved up nicely a dollar from there. This stock is loved by solar customers and employees of Sunrun and the numbers were good except for the earnings per share which was due to an accounting change. If the numbers look good and the price action is not, look to see if there is poor guidance given on the conference call. If it is clear then it is obvious that the after hours traders are wrong and you will get a rebound the next day. Macy's is a perfect example of this after their first quarter earnings call.

Apple opened lower today and moved up quickly. This appears to be a common theme as they stay closing above the trillion dollar amount of $207.,7.

Tariffs are working so well that... Who knows what will happen next week. Home Depot, Walmart, Macy's and other retail companies are reporting next week. Happy trading.

Amazon New High and Tesla Grounded

Amazon hit another new high today as it pushed through $1900 as it pushed higher with news of a new clinic option. Boeing and Ford went lower along with Tesla. The Tweet that Elon Musk pushed out appears to be a myth until there is proof. I am sure there will be a new Tweet over the weekend that will drive it up next week.

Alphabet (GOOGL) moved up, came down below the start and then higher. As the Samsung Unpacked event displayed Samsung’s new smart speaker it dropped quickly to 1262 and bounced higher. As a Samsung user and a Google Home user, I would not switch to Samsung to use Bixby as I hate Bixby. The best time to buy Call Options showed when the price dropped but the stochastic indicator did not come down as far. It was also very close to where it opened today also. Check out the chart.

Sonos fell further as they are getting closer to their IPO price. CNBC's Jim Crammer smashed Sonos for sharing a dismissal outlook after their IPO. Spotify had a huge jump once they were announced as a partner with Samsung at today's event. I jumped in midway up on some calls and sold them within 5 minutes for a decent profit.

Roku reported earnings Wednesday after market close and they broke even for the 2nd quarter which was better than the lose analyst were expecting them to report. I made money on the IPO release last fall and I saw this was so low a few months ago that it was close to it's opening week around $30/share. I love our Roku televisions and thought this is one to buy and hold. Unfortunately I wanted to get dividends instead of growth so I sold a Call on it and couldn't afford to buy it back as it moved up above $40 that week. It will go higher as they are trying to expand their channel to be used without the need for a Roku device.

Everything is up so much this week that it might be crazy to think that it will continue tomorrow. I would expect a big pull back on Friday but could be wrong. 

Elon Musk and Tesla Dream

Elon Musk appears to be settling himself and the company up for the biggest disaster possible with his recent Tweets about taking Tesla private. Tesla has struggled to make production goals for quite some time and has failed to make a profit for years. As the demand has increased, Tesla has failed to make enough vehicles in a timely fashion to meet the demand.

Tesla's failure to meet demand and success in creating a wonderful vehicle has created opportunities for other high end auto makers to meet the needs of customers. Porsche, Volvo, BMW and other automotive companies have produced electric and hybrid vehicles that Tesla customers migrate to because they don't have the patience to wait 3 to 18 months to buy a vehicle. Tesla has failed also to perfect self driving in their vehicles when Nissan and others have employed radar to detect stopped objects for a few years. Tesla makes their cars upgradable, but they are about to be passed up by Google’s Waymo.

Tesla might not have too many improvements to make to their vehicles, but increasing production to achieve economies of scale should be the ultimate goal. Possibly Musk could argue that is what they are trying to do with new factories in China and Europe. Tesla increasing production is the most important thing the company must improve. By Tesla operating as a public company it has a public responsibility to shareholders to produce products as the most efficient way.

Elon Musk expects to run Tesla more efficiently as a private company doesn't make sense as they are in a completely different business than Space X which he says runs very well. Space X might be efficient launching a rocket once a month, but it is a business that must focus on efficiency rather than law of large numbers like a struggling car company must accomplish. Thankfully running Space X allows Musk the ability to generate income that he can back Tesla financially although he states they will continue to operate as separate entities.

Keeping Tesla separate is a good thing, but many people want to see Tesla succeed and if Musk wants to take the company private, many have expressed desire to get more than the $420/share price Musk Tweeted yesterday. That is a lot of money and based on that fact alone Tesla should be trading above $400/share. To accomplish the buy out would be a complete waste as the company has a large amount of debt obligations and is burning through cash. If Musk has enough cash to take the company private, he should use it to focus on making the company better and buyers will buy it and short sellers will be burned.

Elon Musk is too concerned with short sellers as I am sure his employees do not go to work wondering if the stock is going down big today. Short sellers do not have anything to do with the production of Tesla products. Improvements to the Tesla brand and increased production should be the only thing that Elon Musk should desire for Tesla. If he doesn't like answering questions of doubters then he should have it handled through a PR team so it doesn't waste his time.

That is how Tesla could be great and loved by most.

Profiting From Options in Boeing, Apple, Alphabet and Tesla

Yesterday's run up in Tesla was huge but as I mentioned yesterday, if Elon Musk does not follow through, he will go to jail. I will follow up up on that in a separate blog later. Boeing was affected by more tariff talks this morning with China imposing more tariffs on US goods. It opened down, came up momentarily and that is where to buy a Put Option today.

Tesla opened lower, ran up quickly and then sold off from the 382 area. Tesla has a tendency of moving one direction and switching during the day. Here is the chart.

Apple opened below 107 so that is where you look for a bottom. The bottom was in around 105.30 and from there you should buy a 205 Call Option to hold or just make a quick profit if the expiration is for this week. You definitely would have made some good money with it.

Alphabet (GOOGL) was also a great way to make a profit from Call Options today. With Alphabet I have found that you wait to find the initial direction and buy an option for that direction when it comes back to the starting point. I saw it ran up to 1258 and come down to 1252 in the first couple of minutes. To me it appeared to go up, but I waited as it went up again and came back to 1256 where I bought 2 Call Options. When going up, I expect it to go around 12-14 points higher. With that in mind you can set a sell limit order and it should get hit typically around twice of what you paid for it.

Today Amazon hit a new high. I would expect Alphabet and Amazon to be higher tomorrow, but will wait for tomorrow to find out what is going on.

I showed 4 different stocks to make money on options, but I would recommend only using one or two at most when shirt term trading. 

Tesla Crazy, Market Movers to Profit

International markets have been down and were up last night which our markets took off from open. Apple moved down below 207 and Sonos moved below 19/share. Alphabet (GOOGL) opened higher and continued higher to 1265. When it opened above the 1249 mark it was a signal that it was going higher. It went to 1265, came back to 1256, back up and back down to finish at 1255. There was a definite trading pattern it followed today and the 2nd path was easier to read.

Tesla was trading around 342 when it suddenly shot up with news of Saudi Sovereign Wealth Fund investment of $2 billion along with a Tweet by Elon Musk saying that he wants to take the company private at $420/share. Trading stopped at 2:45pm for an hour due to pending news. Musk later Tweeted that funding is secured pending a shareholder vote.

Elon Musk of Tesla is backing himself into a corner. By Tweeting his intention to take Tesla private to bust short sellers might blow up in his face. At this point he will have to make it fully public that they will purchase shares back at $420/share or go to jail for market manipulation. If he gets goes to jail, Tesla will go to zero. Buying a long dated option might be a good idea but could also turn to crap.

The real story will come out in the next couple of days and it will go up to $420 or will go down past $300/share.

Fed Meeting and How to Trade It

With the Fed meeting ending today, stocks have a tendency of being flat or down. Before the market opened, the 10 year Treasury Note moved above 3% which is a positive sign for banks and JP Morgan moved higher at open. It did trade lower from there but it is a positive sign for the banks over the next couple of days which should lead the market higher.

Boeing opened down from Tuesday's close and pointed to moving up from open until about 10:40am. At that point it went down for most of the day. I prefer to make money quick and would have preferred to buy Call Options on Boeing and be done before 11am.

Alphabet opened up from 16 from where it closed on Tuesday due to news that Google is going to censor their search engine to be allowed to operate in China. From history I have found that when it opens higher like this, it will try to return to where it closed the prior day before going higher. Buying Puts near open would have been scary but profitable. Buying Calls at 2:10pm would be a great deal also today.

Unfortunately I did not trade Boeing today and didn't trade Alphabet correctly. I was mad at 2:10pm, but didn't panic as I knew it was going back up to 1236 by the afternoon. I escaped the day with a loss, but not as bad as if I sold at the worst time. I write this blog daily in hopes that it helps someone but more importantly I learn how to be better because I am confident that you can make money in thousands every day if you trade properly based on technical indicators and knowing tendencies.

Elon Musk and Tesla had a great conference call after releasing earnings from the second quarter this afternoon. The stock shot up after hours over 30 points. I expect to see it come down in the first 10 minutes and shoot higher for most of the day tomorrow. I will trade it if the technical indicators make sense. 

Let the Mergers Begin!!!

• The biggest news for the day was the Fed Funds Rate increasing .25% and Fed Chairman Powell's speech about the state of the economy. The rate increase was expected and the market traded like it through out the day. Most things were up, dropped at 2pm when it was announced, went up during his speech and dropped hard for the last half hour of the day. Based on this reaction, I would expect the market to drop a little more on Thursday and turn around mid day
• Boeing dropped sharply more on news that an airline was considering dropping their airplane order. This should not be a big deal as they have a long list of customers waiting for new planes. I would expect to see Boeing move up for the rest of the week as it was over sold.
• Tesla was up and down for the day and back up again. After the market close it
  
  was announced that Elon Musk is going to buy more shares. He is already the largest shareholder and he will own around a third of Tesla. I would expect to see shares jump on Thursday on this news.
• The banks were down in the day and were the first to spike when the interest rate was announced at 2pm. They were also the first to fall in the last hour of trading. I would expect to see them lead the way in the next couple of days.
• Home Depot was down sharply at open and fell below 200. When ever this happens it should be bought with Call Options. It still ended the day down, but still above 200. Home Depot typically has great Thursday afternoons and Fridays. 
• SunRun was up again breaking through the 14 mark. Its PE ratio is low and has more run to move up under the sun. lol
• H&R Block was a great buy if you got it at $24 or less. They moved up to 24.70 during the day which was good movement for this stock that typically has little movement. Like Macy's and L Brands, this was a great buy based on earnings, dividends as the depressed forecasted earnings drove it down yesterday afternoon. I would expect to see it back to the 30 range when a couple of analyst upgrade it in the next couple of weeks. I would not purchased Call options on it unless they were 2 months out. Given the low volatility, they could be purchased at a great price.