Trade Updates December 18, 2020

Trade Update: EA Dec/Jan Call Calenar

by Dan

On Nov 11th when Electronic Arts (EA) was trading $118 I detailed a bullish trade idea, via a call calendar on my In the Money segment with Fidelity Investments on RiskReversal (here):

Electronic Arts (EA) Stay at home stocks have seen massive selling since the announcement of the vaccine….some baby with the bathwater… gaming might be one of the spaces that do not deserve to be…

Leg into bullish trade for the new year…

Bullish Trade Idea: EA ($118) Buy Dec – Jan 125 call calendar for $1.25

-Sell to open 1 Dec 125 call at $2

-Buy to open 1 Jan 125 call for $3.25

Much like the trade idea in Disney (DIS) from a week earlier than this, I got too cute, messing up a perfectly good idea with the wrong trade structure, where a straight long call or call spread would have done the trick, and then some.

With an hour to December expiration, and the strike well into the money this trade idea should be cleaned up. With the stock at $141.50 the trade is a loser and should be closed, about now at $1.10. If the trade was not closed with the short Dec strike so far in the money, then you would be assigned 100 shares short at $125, which is a loss of $16.50 which is offset by the long Jan 125 call that is worth about $17.60.