A Possible Trade Ahead of Earnings

[DarterBlue]

Texas Roadhouse Grill reports earnings after market close on Monday, July 30, 2018. During my trip to El Paso, we had dinner there and had to wait 1 hour and 15 minutes for a party of 8 to be seated. I was told by my niece that she and her husband frequent the place and that our wait was consistent with past experience. While the food there is fine if you are into steaks, personally, I could not patronize a place with frequency where the wait was that long. 

With the above said, if I can get them for $1.45 or less, I may purchase 10 call option contracts on the August 17, 2018, Strike 70, contracts. As of Friday's close, the bid/ask was 1.35/1.55. Thus, procurement at 1.45 would set me back approximately $1,465 factoring in commissions. This is very much an all or nothing trade, as an earnings miss would render these options almost worthless given the closeness to expiration. Hence, the small amount of capital committed to it.

If made, this trade is purely speculative in nature and is predicated on a solid earnings beat. I will update this thread later regardless of the course of action I take.

[DarterBlue]

As of now, I have not put this trade on and if the stock holds its gains today, I will not. No need to pay up in this market environment. 

If the stock goes flat or into negative territory before the close, I will make the trade. 

[AztecPadre]

What do you do for a living if you don't mind me asking?

[DarterBlue]

24 minutes ago, AztecPadre said:

What do you do for a living if you don't mind me asking?

I am retired. I worked in the financial services industry in the USA and as an Economist in Jamaica. 

I trade my own accounts in my spare time. 

[DarterBlue]

4 hours ago, DarterBlue said:

As of now, I have not put this trade on and if the stock holds its gains today, I will not. No need to pay up in this market environment. 

If the stock goes flat or into negative territory before the close, I will make the trade. 

It came close at one stage in the early afternoon, but my 1.45 limit on the stock was never reached. Therefore, I did not make the trade. In a stronger market I probably would have. However, in the current mood swing market, you have to use more risk control and not chase trades. 

Today was a strange end to a strange week as July wraps up. What will August bring? 

[dan in daytona]

16 hours ago, DarterBlue said:

I am retired. I worked in the financial services industry in the USA and as an Economist in Jamaica. 

I trade my own accounts in my spare time. 

......beneath his conservative veneer, he lives for the "juice." Darter is an adrenaline junkie

[DarterBlue]

1 hour ago, dan in daytona said:

......beneath his conservative veneer, he lives for the "juice." Darter is an adrenaline junkie

Hey, I am a Blue Darter, what can I say?

[DarterBlue]

On 7/27/2018 at 8:23 AM, DarterBlue said:

Texas Roadhouse Grill reports earnings after market close on Monday, July 30, 2018. During my trip to El Paso, we had dinner there and had to wait 1 hour and 15 minutes for a party of 8 to be seated. I was told by my niece that she and her husband frequent the place and that our wait was consistent with past experience. While the food there is fine if you are into steaks, personally, I could not patronize a place with frequency where the wait was that long. 

With the above said, if I can get them for $1.45 or less, I may purchase 10 call option contracts on the August 17, 2018, Strike 70, contracts. As of Friday's close, the bid/ask was 1.35/1.55. Thus, procurement at 1.45 would set me back approximately $1,465 factoring in commissions. This is very much an all or nothing trade, as an earnings miss would render these options almost worthless given the closeness to expiration. Hence, the small amount of capital committed to it.

If made, this trade is purely speculative in nature and is predicated on a solid earnings beat. I will update this thread later regardless of the course of action I take.

I have placed the same order again this morning at the same price per contract of 1.45. Given the overall market's weakness, it is quite possible I get filled. I will post the outcome later. 

[DarterBlue]

1 hour ago, DarterBlue said:

I have placed the same order again this morning at the same price per contract of 1.45. Given the overall market's weakness, it is quite possible I get filled. I will post the outcome later. 

Ten contracts purchased for 1,450 plus commissions. This trade will live or die by TXRH's earnings report this evening.

SELAH. 

[DarterBlue]

4 hours ago, DarterBlue said:

Ten contracts purchased for 1,450 plus commissions. This trade will live or die by TXRH's earnings report this evening.

SELAH. 

Live by the sword, die by the sword. Earnings missed by 6 cents per share and the stock is down about $4 in after hours. This renders these options nearly worthless. If I can cover in the morning I will (if they have sufficient worth). So this represents a loss over well over $1,000 at a minimum. Fortunately the maximum loss based on the small capital deployed is less than $1,500.