Trade post mortem - $BIDU, $FL, $PM

During last week I mentioned trades on my Twitter and Stocktwits accounts. I'm summarizing them here to help keep a record. This is a post-mortem post - I don't intend to give trade ideas here but to explain the rationale behind the trades. If you want to see the trades in real-time, follow me on Twitter or Stocktwits. I will try to keep writing these posts as a regular segment - They will add insight into my trading strategy. I found all the trades in the Option Samurai options screener - so you can use the scans to find similar trades yourself. My first trade I published was a long call on $Bidu. I found it on OptionSamurai when I looked for good stocks with low IV. I entered the trade because:

1. Low IV
2. 3% Max loss compared with holding a similar position in stock
3. break even is only 1.5%, when ATR is about 2.5%
4. Had almost till the end of the month
5. I thought that 200 would serve as a support

Went long call $BIDU - Really low IV, only 3% max loss &break-even 1.5%. analysis: http://t.co/ZqduADLJ5y #stocks pic.twitter.com/6mJPmQjJxZ — OptionSamurai (@OptionSamurai) March 3, 2015

I closed the trade with over 100% profit the same week. The second trade I published was an earning play on $FL. I thought I had enough margin of safety with 52.5$ put. Not surprisingly, I found the trade on Option Samurai when I scanned for earning plays.

interesting earning play: $FL -sell Put 52.5 - BE at support. analyze: http://t.co/2NoRYGq4Sx .Can also sell call 60. pic.twitter.com/rLel7PYSOp — OptionSamurai (@OptionSamurai) March 4, 2015

I felt that even if I get assigned, I don't mind owning the stock, and plus, the stock is on support, so I thought I might be able to exit on a bounce. I closed the trade for 5 cents and profit after expiration (the stock went almost to $60) The Third trade was selling put on $PM.

$PM sold put 80. on support and expire before div. If get stock will get it for div+on support. http://stks.co/j1uvV http://stks.co/t1e1s — OptionSamurai (@OptionSamurai) Mar. 5 at 10:27 PM

I felt I had MOS and actually, I wanted to own $PM with a price point of 80$. This represents a 5% dividend yield. And I think that this company will grow its dividend in future years, so for me even higher dividend yield. I thought that I could get assigned, get a dividend (5 days later), and sell an OTM Covered call. Even if I don't get assigned, I will still earn premium and will try again. With the stock dropping the next day, I doubled my position. In hindsight, that was a mistake, but I will still make money on this position in my opinion.

Used the drop on $PM to sell another 80 put. On support and exp 5 days before div. http://stks.co/g1vFO http://stks.co/t1eeR — OptionSamurai (@OptionSamurai) Mar. 7 at 06:12 AM

As always - This is NOT a recommendation. This is meant to be a record and provide an insight into my trading style when analyzed over time. Hope you can learn from it. Do your own due diligence.

Check out our Trade log update with more than 150 trades (and an 87% win rate).

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