Friday Failure – JP Morgan Misses Big!

Wheeeeee – down we go again!  

I hate to say I told you so but — no, actually I’m loving this one…  In fact, JPM specifically was our earnings short of the week – from our Live Chat Room on Monday morning, I said to our Members:

Earnings/QC – I think I like a bearish play on JPM best.   STZ also tempting for a short but, with JPM, we already liked them short on the Dow list.  With JPM at $59.60, I like selling the May $57.50 calls for $2.90 and buying the Jan $57.50/62.50 bull call spread at $2.40 to cover for a net .50 credit.  If all goes well, JPM goes down and the short May calls expire worthless and whatever is left on the spread is bonus money (plus the credit). 

This isn’t that complicated folks, we just read the news and make a play.  The rest is just picking the right option strategy and allocating appropriate amounts of cash – this is what we teach people how to do every day at PSW (you can join us HERE).  That trade will be up more than 100% for the week this morning as JPM plunges to about $55.  Yet another example of all the fun things we can do with our CASH!!!

And you KNOW we shorted Oil Futures (/CL) at $103.50 – I told you that in yesterday morning’s post.  We already hit $103 overnight (up $500 per contract) and we re-loaded this morning at $103.40 and now we’re heading back to $103 yet again.  Hopefully this is the big one and we get a ride back to $102 – which would be up $1,500 per contract.

I mentioned we were back to bearish in the morning post yesterday and, at 11:14, we added an aggressive SDS (ultra-short S&P) May $27/30 bull call spread at $1.15, buying 20 of those for $2,300, offset with the sale of a single ISRG 2016 $350 put at $31 ($3,100) for a net $800 credit.  In yesterday’s sell-off alone, the bull call spread finished at $1.65 ($3,300) while the ISRG puts held $31 for net $200 – a $1,000 gain on the day – THAT’S A NICE HEDGE!