Rationale:
- stock has been on decline since 2016
-gave downbeat earnings report (likely 2018 annual report) in Feb and sold off down to multi year support at 52.50
-Reported better than expected 1st quarter results but the stock has just drifted sideways
-recently had investor day (6.4) where they released more info about long term vision and noted they would return to profit growth in 2021
-my thought is this could be a changing fundamentals play giving me more conviction that the long term support may hold or provide a level for price to bounce higher from
Recap:
How could I have traded this better?
IVR=24%
IV/HV=
Potential ROC= ??
Key corporate events (earnings, dividend, investor day, etc.)= had investor day on 6.4.19
How much risk should/did I take? $1,114; appropriate level of risk
Trade Planning
-structure: unbalanced butterfly
-major support: 52.50
-add point: 53.50
-stop loss: 52.50
-take profit price / risk-reduction plan: take off 1/3 if price reaches peak of tent (57.5); can keep remainder on until expiration
2019-06-21 13:29:37
-CVS tested pulled back and tested $53 3 times b/t yesterday and 1:30p today
-52.40ish is the major support area and price couldn't get below $53 and bounced away sharply every time it tried
-bounced hard and now it is attempting to go red to green on the day
-these are bullish signals (I was prepared to exit based on my plan)
-added 2 lots
2019-07-05 13:51:19
-closed out of 3 lots on Friday for 5.02 & 5.05 (33% ROC) on 7/3
-look for a pop to get out of the remaining lots at
-price keeps meeting sellers when price approaches $56
2019-07-10 22:29:09
-took of 1 lot, 1 lot remaining
-CVS looks like it is ready to breach $56 again once it can close above $55.50
-next major area of resistance is $58
-have exposure in the August expiration as I continue to like this trade
-note Squeeze is still setting up and it looks likely that it will fire "long"
-note how monthly VWAP, weekly VWAP and 8dma are stacked
2019-07-11 21:17:52
-fully closed out of the July position this morning
-CVS gapped up overnight on news that Trump will withdraw drug rebate plan
-exited in the morning
-could have exited the final position in a more concerted fashion; knew there was a high likelihood of gap fill; position was close to expiration and price was above short strikes, so PnL increases as price traded down
Execution detail:
Date/time | Symbol | Side | Price | Position |
---|---|---|---|---|
2019-06-07 13:52:33 | JUL19 19 50 CALL | buy | $4.750 | long |
2019-06-07 13:52:33 | JUL19 19 57.5 CALL | sell | $0.6600 | short |
2019-06-07 13:52:33 | JUL19 19 60 CALL | buy | $0.2700 | long |
2019-06-21 13:19:17 | JUL19 19 50 CALL | buy | $4.320 | long |
2019-06-21 13:19:17 | JUL19 19 57.5 CALL | sell | $0.3325 | short |
2019-06-21 13:19:17 | JUL19 19 60 CALL | buy | $0.1250 | long |
2019-07-03 10:08:04 | JUL19 19 50 CALL | sell | $5.550 | long |
2019-07-03 10:08:04 | JUL19 19 57.5 CALL | buy | $0.2800 | short |
2019-07-03 10:08:04 | JUL19 19 60 CALL | sell | $0.0300 | long |
2019-07-03 10:24:01 | JUL19 19 50 CALL | sell | $5.590 | long |
2019-07-03 10:24:01 | JUL19 19 57.5 CALL | buy | $0.2850 | short |
2019-07-03 10:24:01 | JUL19 19 60 CALL | sell | $0.0300 | long |
2019-07-10 14:59:25 | JUL19 19 50 CALL | sell | $5.470 | long |
2019-07-10 14:59:25 | JUL19 19 57.5 CALL | buy | $0.0900 | short |
2019-07-10 14:59:25 | JUL19 19 60 CALL | sell | $0.0200 | long |
2019-07-11 09:47:59 | JUL19 19 50 CALL | sell | $9.540 | 0 |
2019-07-11 09:47:59 | JUL19 19 57.5 CALL | buy | $2.310 | 0 |
2019-07-11 09:47:59 | JUL19 19 60 CALL | sell | $0.6800 | 0 |
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