CMCSA was a Top Trade Alert on Jan 22nd as well and, though they beat earnings, the lost 139,000 broadband subscribers (94,700 expected) and theme park revenue stagnated and costs were up though Peacock was up 28% - which you would think would be huge.
Our trade idea was:
-
-
- Sell 20 CMCSA 2027 $35 puts for $4 ($8,000)
- Buy 40 CMCSA 2027 $30 calls for $9.85 ($39,400)
- Sell 40 CMCSA 2027 $42.50 calls for $4 ($16,000)
- Sell 10 CMCSA April $37.50 calls for $1.55 ($1,550)
-
That’s net $13,850 on the $50,000 spread with $36,150 (261%) upside potential and a good $10,000 (72%) in additional short call sales – which makes me very happy!
We were playing for them to finish lower in April and those calls will go worthless and the $35 puts are $5.50 ($11,000) and the $30 ($7)/42.50 ($2.35) bull call spread is net $4.65 ($18,600) so net $7,700 is down $6,150 less whatever we make on the short $37.50 calls - not tragic but not a good start.
When this happens, we have to decide how bouncy it will be and I think not very until earnings look better so we can buy back the April $37.50 calls for 0.27 ($270) and sell 20 June $35 calls for $1.55 ($3,100). The 2027 $25 calls are $10 and we're not going to spend $3 to roll down $5 so instead we'll roll the short 2027 $42.50 calls at $2.35 ($9,400) to 20 short 2026 $35 puts ($4.10) and calls ($2.95) for net $14,100.
That is net $7,530 in our pocket so now we are in the spread for net net $6,320 and we have SALVAGED another spread - hallelujah!!!
We take advantage of the higher premium and the FEAR of the traders who are willing to pay us a lot of money for those short $35 puts.
