So much for sitting on the sideline and watching. My order for more SFLY naked calls hit this afternoon just before 3:00. While SFLY was trading around 17.45, my order to sell two SFLY June 17.50 calls (QFYFW). I received $308.50 after commissions. I sold these at twice the price of the first four calls I sold, so I received nearly the same cash. My average cost is $1.02 per option now. That gives up up to $18.50 per share before I’m sitting on a loss.
Just three days ago SFLY was trading below 15 which makes me think this run-up before earnings tomorrow is going to turn into a sell-off soon after they announce, unless they destroy expectations. I’m expecting the old “sell on the news” price action. Also worth noting is that although SFLY closed at its high of the day, it hit a ceiling that has been rising of it’s higher highs. The 100 day moving average is below 19. That’s higher than I want SFLY to go, but good to see another road block in it’s path to the moon.
I’ve been tempted to sell June 15 calls, but have held off because I wouldn’t be too surprised to see SFLY below 15 by the end of the week. If it fools me and moves higher, I’ll sell naked puts at the 20 strike to cover or could even buy shares (turning my naked calls into covered calls) if I think it’ll actually have legs. I’ve thought about buying calls for the May strike, but opted not to hedge yet. They are scheduled to announce Wednesday, tomorrow. That, combined with the Fed will make tomorrow extremely interesting for me.
Well, I have to admit I don’t like it — no jinx intended. Since 30% of the paltry 15 million shares are short, a dangerous short squeeze condition exists that could rocket this higher on good news. You could buy OTM June calls (Bear Call Spread) for a little insurance. Good luck and be careful!
You were right (for a while) on FNM and may be on this one, but I see bad numbers coming with the higher gas prices as being one of many reasons people having bought as many coffee mugs or mouse pads with pictures on them. Volume was lighter on Tuesday than usual, so I’m hoping that’s weighing in my favor.
Looks like SFLY will be heading lower tomorrow. They reported in line with estimates for earnings, but missed revenue and guided lower for the rest of the year.
It certainly looks like you made a good call!