In late July, I issued a trade alert (July 23) to buy some Sept calls on high-flying First Solar. Specifically, we bought the Sept 200 calls at 3.38. This order was sent moments before the start of my webinar, 11am EST. I mentioned this trade a few times, and the stock was sitting around most of the day...but edged higher. We were filled on this day. The next day, the stock shot higher on the heels of a competitor's earnings. This left a gap of course, but when the shorts are on the run this has a habit of going further. We kept it going. On Monday, the stock pushed into a resistance zone and that gave us more than a double on the calls. We sold half for 7.72 (130% gain) and held the other half for free. Earnings were to be out on Thursday (7.30) after the close, so the worst was that we would still make money on this if the reaction was bad. Flash forward to Wed, and the stock is making a nice move but on LOWER volume...RED FLAG. This told me that buyers were not interested here, so we decided to take the remainder off the board, and still managed a double (111%). We were now completely out of the position in front of earnings. Thursday's report was mixed, yet the stock couldn't hold water and tanked more than 11% to under 155. The calls we held would be well underwater now. This was a winning trade from the start and managed properly. Sometimes it's ok to take earnings risk, other times it's better to take it off. In this market, awareness, quickness and satisfaction need to be considered at all times. See chart below.
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