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Fabulous Friday – Nasdaq’s Big 4 Come Through

Wow! 

What a big day for tech as Amazon (AMZN), Alphabet (GOOGL), Microsoft (MSFT) and Intel (INTC) all beat earnings estimates and all raised guidance – pretty much justifying the crazy Nasdaq run – 6,666 it is (see yesterday's Report)!  I hate to say it but it's not a bubble when earnings are blasting higher and all 4 of the big tech names are benefitting from the explosive growth of Cloud Computing and the Internet of Things.

I will be on Benzinga's Pre-Market Prep this morning – just in time to look over the GDP report and I'm sure we'll be discussing the Nasdaq and where we could go from here.  Last time I was on the show was September 29th and we discussed our Limited Brands (LP) spread, which has already moved up from $1,600 to $4,200, so up $2,600 (162%) in short order but only "on track" for our 800% projected gain.  

We also talked about using the Russell Ultra-Short ETF (TZA) as a hedge with 50 Nov $12 calls at $1.95 ($9,750), selling 50 $14 calls for 0.70 ($3,500) for a $1.25 ($6,250) net cost, which we offset by selling 5 Apple (AAPL) 2020 $130 puts for $11.20 ($5,600) to drop the net of the spread to $650.  Despite the rally, TZA is at $13.45 so the spread is $1.45 ($7,250) while the AAPL puts have fallen to $10 ($5,000) so net $2,250 is up $1,600 (246%), despite not even needing our hedge during this rally.  

Why does that work?  Because we are

and selling premium when we establish our spreads.  The only sure thing in the markets is that premiumd DOES expire – and that gives us an edge in every trade we make.  

This morning we discussed a variation of yesterday's long trade idea on Celgene (CELG):

  • Sell 5 CELG 2020 $80 puts for $9 ($4,500) 
  • Buy 10 CELG 2020 $80 calls for $30 ($30,000)
  • Sell 10 CELG 2020 $110 calls for $16 ($16,000) 

That trade nets you in for $9,500 and returns up top $30,000 for a $20,500 profit (215%) if CELG can get back over…

Provided courtesy of Phil's Stock World.

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