On May 18th we checked in on 4 different stocks as the market was showing some early signs of a rotation out of stay at home stocks and into some beaten down travel stocks.
With that trend continuing today let's check back in and see how various trades performed against each other.
Here's where stocks were at the time and the price targets for June we used for the travel stocks, and the July targets we used for the Stay at Home stocks. Let's start with TRIP. Tripadvisor-TRIP was $18.75, we used a June price target of $21.50, , targeting recent highs, the stock is now $22.87. Here were the trades returned by OptionsAI technology for that price target, from the May 19th post (all based on a 1 lot):
TRIP has attempted 2 big rallies since its March lows, both failing to get above ~21.50. Here's a bullish price target for that level, looking out a month and the trades returned from OptionsAI technology:
With the stock now $22.85:
- The June 19 call, originally $138 is now worth $415
- The June 19/21.5 call spread, originally $86 is now worth $193
- The short June 19/16.5 put spread, originally $100 is now worth $25 (a gain of $75 but on total original risk of $150)
The call is the best performer but it cost the most. Basically any of these trades would have worked well, and was simply a choice of how much original risk/cost one was willing to commit.
Now to United. UAL was $24.30, we used a June price target of $32, the stock is now $30.50.
Here were the trades returned by OptionsAI technology for that price target, from the May 19th post:
And here's the same in UAL, targeting recent highs around ~32:
You'll notice that the UAL returns two different call spreads. That is because UAL's recent highs are much higher than the current expected move as priced by the options market. This may be due to the fact that the airlines had another leg down following the news of Warren Buffett dumping those stocks. The 29/32 call spread is an out of the money call spread that costs very little to make a a lot if UAL were to try to take back those recent highs. Of course the trade off is its very low probability. But if things truly have changed in sentiment, or if UAL was indeed forcing a lot of shorts to cover, the options market may be slow to react in how its pricing potential moves.
With the stock now $30.50:
- The June 24 call, originally $288 is now worth $725
- The June 24/32 call spread, originally $222 is now worth $450
- The June 29/32 call spread, originally $53 is now worth $140
In this case the Out of the Money June 29/32 call spread is the biggest winner, and that makes sense because the price target was aggressive, above the expected move and therefore that trade was looking to risk very little for the smaller probability of a move above what options were expecting.
Now let's look at the bearish price targets in the Stay At Home stocks.
First Peloton. PTON was $44.20, we used a July price target of $35, the stock is now $40.60. Here were the trades returned by OptionsAI technology at the time:
And in PTON, a bearish price target, in line with bearish consensus in July (~$35) returns these trades:
With the stock now $40.40:
- The July 44 put, originally $552 is now worth $620
- The July 44/35 put spread, originally $368 is now worth $435
- The short July 44/50 call spread, originally $212 is now worth $150 (a gain of $62)
Now to Zoom-ZM was $165, we used a July price target of $130, the stock is now $158. Here were the trades generated by OptionsAI technology at the time:
ZM, a bearish price target in July (2 months out) playing for a decline of about 20% (price target ~130) which is on the expected move from the options market:
With the stock now $158:
- The July 165 put, originally $2,150 is now worth $2,150
- The July 165/130 put spread, originally $1,410 is now worth $1,470
- The short July 165/200 call spread, originally $1,150 is now worth $1,000 (a gain of $150 but on risk of $2,350)
In this case the stock is not down huge and its reflected in the trades as the short call spread is actually doing a little better than the long premium trades. That's a good example of the use of a short spread when one simply wants to fade the move, instead of being aggressive on a big move.
See a part of OptionsAI technology with your own price target and demo trades in AAPL HERE
- Credit vs Debit Spreads
- Eye on Next Week's Earnings - AZO, WDAY, CRM, COST, CGC and more.
- Using an in the money long call spread as a stock alternative in NVDA.
- Comparing long out of the money calls versus a long call spread for a similar cost in TSLA.
- Condors into the Cloud earnings- BOX, ADSK, CRM, WDA, OKTA.