A Trading Experiment
Polina Tankilevitch/Pexels
Trying Something Different This Week
In my Exits post on Friday, as usual, I detailed all the trades I exited last week.
As it happened, we had a lot of exits last week:
Options Trades
Skip-strike butterfly put spread on Carvana (CVNA -12.36%↓). Entered at a net debit of $1.61 on 6/13; will expire wothless. Loss: 100%.
Call spread on Sirius XM Holdings (SIRI 0.00%↑). Entered at a net debit of $0.23 on 7/31; will expire worthless. Loss: 100%.
Call spread on Fisker (FSR 0.00%↑). Entered at a net debit of $0.33 on 8/3; will expire worthless. Loss: 100%.
Call spread on Expedia (EXPD 0.00%↑). Entered at net debit of $0.45 on 8/2; will expire worthless. Loss: 100%.
Call spread on JetBlue Airways (JBLU -3.62%↓). Entered at a net debit of $0.40 on 7/31; will expire worthless. Loss: 100%.
Put spread on Starbucks (SBUX 0.00%↑). Entered at a net debit of $0.96 on 8/1; exited at a net credit of $0.11 on 8/3. Loss: 89%.
Call spread on Zillow (Z 2.97%↑). Entered at a net debit of $0.45 on 8/2; exited at a net credit of $0.38 on 8/4. Loss: 16%.
Put spread on Match Group (MTCH -9.95%↓). Entered at a net debit of $0.90 on 8/1; exited at a net credit of $0.93 on 8/2. Profit: 3%.
Put spread on Pinterest (PINS -0.36%↓). Entered at a net debit of $0.89 on 8/1; exited at a net credit of $0.96 on 8/2. Profit: 8%.
Put spread on Funko (FNKO -5.86%↓). Entered at a net debit of $0.75 on 8/3; exited at $1.00 on 8/4. Profit: 33%.
Call spread on Coinbase (COIN 0.80%↑). Entered at a net debit of $0.44 on 8/3; exited at a net credit of $0.59 on 8/4. Profit: 34%.
Puts on Silvergate Capital ($SICP). Entered at $1.26 on 3/9; exited at $2.10 on 8/3. Profit: 66%.
Call spread on Tanger Factor Outlets (SKT 0.00%↑). Entered at net debit of $0.45 on 8/3; exited at a net credit of $0.80 on 8/4. Profit: 78%.
Split strike butterfly on Hyatt Hotels (H -7.95%↓). Entered at a net debit of $3.13 on 8/2; exited at a net credit of $6.08 on 8/3. Profit: 94%.
Call spread on Wayfair (W 0.00%↑). Entered at a net debit of $0.45 on 8/2; exited at a net credit of $0.90 on 8/3. Profit: 100%.
Put spread on Redfin (RDFN 0.00%↑). Entered at a net debit of $0.44 on 8/3; exited at a net credit of $0.90 on 8/4. Profit: 105%.
Put spread on Altria Group (MO -1.04%↓). Entered at a net debit of $0.31 on 7/31; exited at a net credit of $0.69 on 8/2. Profit: 123%.
Toward the end of that post, I wrote,
As far as the earnings trades, I’m going to compare our biggest losers (Exits #2 through #6) to our biggest winners (Exits #13 through #17) over the weekend and see if I can glean anything that can help us improve our selections going forward. In any case, I plan to be more selective next week as the number of trades was a lot to keep track of this week.
Out of curiosity, I pulled up the Piotroski F-Scores for those five biggest losers and and five biggest winners, which you can see below. The Cs there stand for call spreads (bullish trades) and the Ps stand for put spreads (bearish trades).
Recall that Piotroski F-Scores range from 0 to 9, with 9 being the best. Traditionally, scores of 8 and 9 are considered bullish and scores of 0-2 are considered bearish, but to cast a wider net, I considered 7s bullish as well above. I circled the stocks I would have placed trades on if they had F-Scores of 7 or above (for bullish trades) and 2 or below (for bearish trades). Doing that ended up eliminating most of the trades, but it left two winners (a bullish trade on SKT and a bearish trade on RDFN) and one loser (a bullish trade on EXPE).
It’s admittedly a small sample size, but I’m going to try this approach with earnings trades this week, adding it to the other data we’ve been using, and see how it goes. If you'd like a heads up when I place these trades, feel free to subscribe to the Portfolio Armor trading Substack/occasional email list below.
Afternoon Update
Due to a lack of companies reporting with Piotroski F-Scores of 2 and below, I widened the net on the bearish side by considering names with scores of 3 and below. So we ended up with two bullish trades on names with F-Scores of 7, and two bearish names with F-Scores of 3.
Early Tuesday Update
Two of the four companies reported after the close Monday, one of the ones on our bearish list, Lucid Group (LCID), and one of the ones on our bullish list, Chegg (CHGG). LCID missed on both top and bottom lines, but was up about 3% after hours on improved guidance; CHGG missed by a penny on earnings, beat on revenue, and was up nearly 24% after hours. We'll see how both do today.
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