If it ain't broke, don't fix it. Verizon (VZ) and Philip Morris International (PM) both provided solid enough earnings reports to keep their stock prices well positioned for yesterday's earnings trades.
Philip Morris was a little slow-moving early this morning, but the stock has worked very well within the parameters set out yesterday. I have closed this position for an average sale of $0.52 on the call side of the equation, which was long 1x October $86 calls and short 3x October $87.50 calls. Currently, I still have the ratio put spread open. For a cost of $0.03 to $0.04, I could change it to a simple put spread, and I'll look to do that at $0.03 or less near today's close.
Overall, the entry here was $0.11, so it's a trade I am pleased with thus far; however, it is not one to talk about in terms of percentages. The percentages of $0.11 to $0.52 look fantastic, but they aren't the whole story. In fact, that percentage discussion would be misleading. There were both naked calls and naked puts in this trade. The cash or margin requirement on this trade shrinks the percentage return way down. It comes down to right or wrong, profit or loss, yeah or nay.
Something similar can be said about Verizon. I've closed out of this one for $1.09 on average, as I didn't do the closing trades all at once after my $0.67 entry yesterday. This trade only had the short put component to it and not the short call side, so risk wise, it was more contained than Philip Morris. And looking at the chart, I do think $48 will hold, so while it is tempting to hold Verizon and I wouldn't fault anyone for doing so, I know there are plenty more trades to come from this earnings season.
The big names after the bell are Google (GOOG), Chipotle Mexican Grill (CMG), and Las Vegas Sands (LVS). I have to say I'm not sure I am going to trade them, although I will go through the charts on Google and Chipotle later today. I'm a bit more interested in General Electric (GE), Schlumberger (SLB) and Honeywell International (HON), as I think they are more likely to act like a Verizon or Philip Morris or the earlier trades from the week. I just want to avoid anything of an IBM (IBM) nature.
At the time of publication, Collins had no positions in stocks mentioned.