Note: There is a lot of valuable information in this report for anyone who trades stock options. It will take you about 15 minutes to read, but that investment in your time could be worth thousands of dollars to you down the line. I hope you will read it thoroughly all the way to the end.
On April’s Fools Day in 2013, we opened a new $5000 portfolio at Terry’s Tips. We thought that might be a lucky day to start. For several months we had been studying what happens just before and after a company announces their quarterly earnings, and this portfolio was designed to put our observations to work.
The biggest thing we discovered in our analysis was that . . .
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The Green Mountain Coffee Roasters (GMCR) spread I recommended last week resulted in a 20% gain. Not bad considering we were blindsided by their announcing a new 5-year deal with Starbucks that shot the stock 25% higher while we were betting on a lower post-announcement price. Our gain was not as great as last week’s 50% gain on Apple, but we will take 20% anytime (I’m sorry, but I executed the Apple spreads in a Terry’s Tips portfolio and did not share it with the free newsletter subscribers).
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Update on the Green Mountain Coffee Roasters (GMCR) Trade
On Monday, I wrote to my free newsletter subscribers and recommended the following trade in advance of the company’s earnings announcement after the close on Wednesday:
Buy To Open 10 GMCR Jun-13 52.5 calls (GMCR130622C52.5)
Sell To Open 10 GMCR May2-13 57 calls (GMCR130510C57) for a debit of $3.70 (buying a diagonal)
This spread would make a gain for the week if the stock managed to . . .
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