Second Quarter Earnings Options Logbook 2012

Second-quarter earnings unofficially kicked off with the usual Alcoa (AA) reporting on Monday July 9, 2012. Over the next six weeks, the remaining large cap stocks will report their own earnings reports. And as promised in the last quarter, I will keep a record of all the trades I implement with respects to an anticipated earnings report.

Total earnings for the season: -$550.18.

Wynn Resorts (WYNN)
Trade Date: July 17, 2012	Reporting Date: July 17, 2012 AMC
Closing Price Pre-Earnings: $97.36	Closing Price Post-Earnings: $96.25
Sold 2 105.00 calls at $0.53, sold 2 90.00 puts at $0.58; expiring July 21, 2012
WYNN finishes week at $97.31
Net profit of $180.51 on $4,900 margin or 4.02% return
Note: Options closed early to free margin for other trades

Qualcomm (QCOM)
Trade Date: July 18, 2012	Reporting Date: July 18, 2012 AMC
Closing Price Pre-Earnings: $56.05	Closing Price Post-Earnings: $58.44
Sold 5 60.00 calls at $0.23, sold 5 50.00 puts at $0.20; expiring July 21, 2012
QCOM finishes week at $57.68
Net profit of $182.50 on $7,000 margin or 2.61% return

Netflix (NFLX)
Trade Date: July 24, 2012	Reporting Date: July 24, 2012 AMC
Closing Price Pre-Earnings: $80.39	Closing Price Post-Earnings: $60.28
Sold 2 100.00 calls at $0.92, sold 2 65.00 puts at $1.10; expiring July 27, 2012
NFLX finishes week at $58.90
Net loss of $1,233.49 on $5,578 margin or 22.11% loss, excludes roll down on call option
Note: NFLX put closed at $8.00 on Thursday to free margin

Las Vegas Sands (LVS)
Trade Date: July 25, 2012	Reporting Date: July 25, 2012 AMC
Closing Price Pre-Earnings: $37.51	Closing Price Post-Earnings: $36.41
Sold 5 41.00 calls at $0.26; expiring July 27, 2012
LVS finishes week at $36.79
Net profit of $113.76 on $4,291 margin or 2.65% return

Amazon (AMZN)
Trade Date: July 26, 2012	Reporting Date: July 26, 2012 AMC
Closing Price Pre-Earnings: $219.20	Closing Price Post-Earnings: $237.32
Sold 2 250.00 calls at $0.71, sold 2 180.00 puts at $0.58; expiring July 27, 2012
AMZN finishes week at $237.32
Net profit of $223.00 on $8,767 margin or 2.66% return

Mastercard (MA)
Trade Date: July 31, 2012	Reporting Date: August 1, 2012 BMO
Closing Price Pre-Earnings: $436.57	Closing Price Post-Earnings: $427.20
Sold 1 460.00 call at $2.50, sold 1 405.00 put at $1.36; expiring August 3, 2012
MA finishes week at $424.13
Net profit of $309.02 on $10,346 margin or 2.99% return
Note: We closed the above positions and tightened the strangle to $420 to $435 more than doubling our profit, but this was a post-earnings trade.

Dell (DELL)
Trade Date: August 21, 2012	Reporting Date: August 21, 2012 AMC
Closing Price Pre-Earnings: $12.34	Closing Price Post-Earnings: $11.68
Sold 10 13.00 calls at $0.30, sold 10 12.00 puts at $0.35; expiring August 24, 2012
DELL finishes week at $11.26
Net loss of $177.49 on $3,390 margin or 5.24% loss

Hewlett-Packard (HPQ)
Trade Date: August 22, 2012	Reporting Date: August 22, 2012 AMC
Closing Price Pre-Earnings: $19.20	Closing Price Post-Earnings: $17.64
Sold 10 20.00 calls at $0.26, sold 10 18.00 puts at $0.16; expiring August 24, 2012
HPQ finishes week at $17.58
Net loss of $37.49 on $4,825 margin or 0.78% loss

As we have discussed, most option traders would much rather sell an option going into an earnings call since the premiums are significantly higher. Historically, selling out-of-the-money options yields better results than going long an option because the time value disappears as earnings are reported.

The trades above do not include roll ups and roll downs executed after the earnings report. These rolled trades would impact the profits positively but have been removed from the above trades. An assigned option closed after the report would be included.