Hey everyone, will be hanging out awaiting the results of earnings for Align Technologies, Service Now, and Tesla this afternoon. These are all companies I have short term options bets on which make up 3% of my portfolio value at risk. There is the potential for some significant upside if these move 5% or more after earnings.
Next up is Service Now. $290 strike price. I paid $18.30 premium so It needs to be above $308.30 or below $271.7. Right now it is trading at $282 so each contract is worth $8.00 meaning I will lose $10 per contract if it stays at $280 tomorrow. I bought 3 straddles so $10 x 100 x 3 = a loss of $3,000 on this one.
Between ALGN and NOW we are at +$1,840 if things stay the same.
Okay so Align is tradding at $213 after hours. So we subtract $213 from the strike price of $265 which means that straddle is worth $52. Then we subtract out the premium I paid which was $27.80 and that leaves us with $24.2 profit per straddle. Because it is an options contract, it represents 100 shares so we multiply $24.2 by 100 = $2,420 then multiple that by 2 because I had two contracts. So our profit on this if Align stays at $213 tomorrow would be $4,840
Now Tesla. Trading at about $243 right now so my $265 strike straddles are worth $22 if it stays here. I paid $18.48 for each straddle which means I'll have a profit of $3.52 if it stays here. We had 3 straddles so $3.52 x 100 x 3 = a profit of $1,056.
I expect this one to move a lot based on the call so who knows.
But add that to the NOW and ALGN profit and we come away with
$2,896 between the three of them.
I risked a total of $17,000 on these three gambles (about 3% of the portfolio) and if things stay the same we will have made a 17% profit in 24 hours.
These were in a taxable account so lets subtract the short-term capital gains tax and use 25% just to be safe. So afte taxes we made $2,172 on this for the portfolio.
I can’t recall the name of the app, but I remember seeing one where an investor can “follow” another investors trades and the originator earns upside, effectively enabling someone to run a fund without the overhead. Would love to follow your trades with a portion of my portfolio!
My brokerage Interactive Brokers. Whats up Harvey? Thanks for reading and hanging out. I realize they didn't come through fully in the email, but they should show the positions on the page.
Next up is Service Now. $290 strike price. I paid $18.30 premium so It needs to be above $308.30 or below $271.7. Right now it is trading at $282 so each contract is worth $8.00 meaning I will lose $10 per contract if it stays at $280 tomorrow. I bought 3 straddles so $10 x 100 x 3 = a loss of $3,000 on this one.
Between ALGN and NOW we are at +$1,840 if things stay the same.
Waiting on Tesla....
Okay so Align is tradding at $213 after hours. So we subtract $213 from the strike price of $265 which means that straddle is worth $52. Then we subtract out the premium I paid which was $27.80 and that leaves us with $24.2 profit per straddle. Because it is an options contract, it represents 100 shares so we multiply $24.2 by 100 = $2,420 then multiple that by 2 because I had two contracts. So our profit on this if Align stays at $213 tomorrow would be $4,840
That's a great explanation.
Thanks Colin!
Now Tesla. Trading at about $243 right now so my $265 strike straddles are worth $22 if it stays here. I paid $18.48 for each straddle which means I'll have a profit of $3.52 if it stays here. We had 3 straddles so $3.52 x 100 x 3 = a profit of $1,056.
I expect this one to move a lot based on the call so who knows.
But add that to the NOW and ALGN profit and we come away with
$2,896 between the three of them.
I risked a total of $17,000 on these three gambles (about 3% of the portfolio) and if things stay the same we will have made a 17% profit in 24 hours.
These were in a taxable account so lets subtract the short-term capital gains tax and use 25% just to be safe. So afte taxes we made $2,172 on this for the portfolio.
I can’t recall the name of the app, but I remember seeing one where an investor can “follow” another investors trades and the originator earns upside, effectively enabling someone to run a fund without the overhead. Would love to follow your trades with a portion of my portfolio!
Hmm...never heard of that. Curious to learn more about it.
This is close: https://www.etoro.com/popular-investor/
Awesome newsletter - love the transparency and option plays!
Thanks Eric! I try to keep it mostly long term oriented... but I dabble a little in options. Just try to make it clear that they can be very risky!
Which app are the screenshots from?
My brokerage Interactive Brokers. Whats up Harvey? Thanks for reading and hanging out. I realize they didn't come through fully in the email, but they should show the positions on the page.
Thanks for sharing your valuable insights! Cheers
Thank you Abhay!