Exits, 5/4/2024
A new approach to post-earnings trades.
Dids/Pexels
This Week’s Trade Exits
As soon as I exit a trade, I note that in the comments of the post where I first mentioned the trade; at the end of the week, I try to track them all in one post. A couple of weeks ago, we had a few options get assigned at expiration (on April 19th), and we didn’t fully exit the last of those positions until last Monday. These are the trades I exited since our last Exits post on Monday:
Stocks or Exchange Traded Products
Coinbase (COIN 0.00%↑). Bought at $217.61 on 4/19/2024; stopped out at $199.20 on 5/1/2024. Loss: 8.4%.
Options trades
Call spread on Coinbase (COIN 0.00%↑). Entered at a net debit of $0.60 on 4/30/2024; exited at a net credit of $0.10 on 5/3/2024. Loss: 83%.
Call spread on Alibaba (BABA 1.32%↑). Entered at a net debit of $2.25 on 2/8/2024; exited at a net credit of $4.50 on 5/3/2024. Profit: 100%.
Comments
Coinbase (COIN 0.00%↑) crushed its earnings estimate this week—the estimate was for $1.18 per share, and COIN earned $4.40 per share. Nevertheless, the stock was down slightly on the week, likely due to concerns about the recent pullback in Bitcoin.
A New Approach To Post-Earnings Trades
In the past, I’ve placed post-earnings trades in situations like this, where a stock is down despite solid earnings (also in some cases where there was an earnings miss but I was still bullish on the stock. One difference I’m doing now is waiting for some price consolidation before placing post-earnings trades. Specifically, I set an alert on Chartmill for when the Setup Rating on the stock hits 7 (out of 10), while the overall Technical Rating is at least a 6. That increases the chance we’re not catching a falling knife. Then we can jump in and place a longer-term bullish trade. I plan to do that with COIN, as I am still bullish on it.
Still Bullish On China
The Alibaba (BABA 1.32%↑) call spread was one of the bullish trades on China we placed earlier this year.
Trade Alert: Betting On China
”Chinese Stocks Hit Rock Bottom” That’s the headline on Zero Hedge today, as the Hang Seng China Enterprises Index suffers its worst weekly loss since last March, raising the possibility that the Chinese government might step in in the near future with some stimulus.
I’m still bullish on China and may be placing another trade on a Chinese stock in the near future.