Earnings Trade of the Day (WFM) 2.8.2012
Reason I like this Trade: I looked at the amount of movement that Whole Foods has had over the last 4 quarters and it has been very tight. Here is a performance of how much the stock has moved the next day after earnings.
11/03/11 $70.56 $69.15 $-1.41 (-2.0%)
07/28/11 $65.43 $67.14 $+1.71 (2.6%)
Average Magnitude of Post Earnings Return 2.3%
The volatility is exploding and I think this is a great risk vs reward trade that I can’t pass on.
UPDATE 2.9.2012 This trade looked a lot better last night when the stock was trading $77.50. The stock is currently trading $79.70. Looking to take off a partial position for $1.50. The more the stock sells off the more profitable. Stay tuned for more updates.
UPDATE 2.10.2012 I sold this spread for $2 and it is currently worth $1.90, I am looking to take it off for a profit, because the more the stock rallies and closer to expiration the less profitable this trade will be.
UPDATE 2.13.2012 With the stock market rallying and Whole Foods selling off, I am trying to get out of this trade. It is currently worth about $1.80, so it is a small winner, but I would like to take the trade off and move on.
UPDATE 2.14.2012 I TOOK 1/5 of my position off at $1.88. I am looking to take the rest off, because this position is long front month premium that would expire on Friday worthless.
UPDATE 2.16.2012 Yesterday I sold the February 80-77.5 Put Spread for $.50 and today I bought my short Feb 75 Puts for $.01, so this trade was a small loser, on to the next trade.
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