Archive for the ‘Positions’ Category
Locked in Gains on SJM and PIR
Here are the realized gains for the SJM and PIR puts. They were bought just before earnings announcements revealed weak earnings and a lowering of their yearly guidance.
Realized Gain
| Date | Qty | Company | Contract | Strike | Expiration | Price | Cost Basis |
| 6/18/2008 | 5 | PIR | Put | 5 | July 08 | $0.15 | $75 |
| 6/20/2008 | 5 | PIR | Put | 5 | July 08 | $0.52 | $260 |
| Days | 2 | Profit % | 246.67% | Profit | $185 |
| 6/18/2008 | 5 | SJM | Call | 45 | July 08 | $0.28 | $140 |
| 6/20/2008 | 5 | SJM | Call | 45 | July 08 | $1.27 | $635 |
| Days | 2 | Profit % | 353.57% | Profit | $495 |
The other positions can be see in the positions page. They haven’t been closed yet and are slightly down. PRGS (Progress Software Inc.), which also released earnings on Thursday, lowered their Q3 guidance. They were able to beet estimates for their EPS but since they lowered guidance and said it was going to be a slow year their stock fell. Ares Trading considers PRGS a long hold and believes that the PRGS July Call will be out of the red by expiration.
Betting on Earnings
With the dramatic shift in price commonly occurring when a company releases earnings (up or down depending on whether they meet analyst expectations), the strategy is to speculate whether a company will report favorably or negatively. Instead of using complex spreads, the strategy is to use naked calls and puts to simply bet whether the company will be going up or down.
Out of the 3 earnings speculation positions, 2 were spot-on and the third was incorrect. Ares Trading initiated positions on the following companies:
PIR (Pier One Imports Inc.) Earnings came out today – Short
PRGS (Progress Software Corp.) Earnings came out today – Long Incorrect
SJM (Smuckers Co.) – Earnings came out today – Short
SSL (Sasol Ltd.) – Medium Term Long
ZMH (Zimmer Holdings Inc.) – Medium Term Long
Unrealized Profit/Loss
| 6/18/2008 | 5 | PIR | Put | 5 | July 08 | $0.15 | $75 |
| 6/19/2008 | 5 | PIR | Put | 5 | July 08 | $0.45 | $225 |
| Days | 1 | Profit % | 200.00% | Profit | $150 | ||
| 6/18/2008 | 2 | PRGS | Call | 30 | July 08 | $0.70 | $140 |
| 6/19/2008 | 2 | PRGS | Call | 30 | July 08 | $0.33 | $65 |
| Days | 1 | Profit % | -53.57% | Profit | ($75) | ||
| 6/18/2008 | 5 | SJM | Call | 45 | July 08 | $0.28 | $140 |
| 6/19/2008 | 5 | SJM | Call | 45 | July 08 | $1.03 | $513 |
| Days | 1 | Profit % | 266.07% | Profit | $373 | ||
| 6/18/2008 | 1 | ZMH | Call | 70 | Sep 08 | $4.50 | $450 |
| 6/19/2008 | 1 | ZMH | Call | 70 | Sep 08 | $4.45 | $445 |
| Days | 1 | Profit % | -1.11% | Profit | ($5) | ||
| 6/18/2008 | 1 | SSL | Call | 60 | July 08 | $2.30 | $230 |
| 6/19/2008 | 1 | SSL | Call | 60 | July 08 | $2.40 | $240 |
| Days | 1 | Profit % | 4.35% | Profit | $10 |
These positions haven’t been closed so neither the profit nor loss is recognized yet. They will be closed tomorrow and a realized profit/loss statement will be posted.
