CRM Earnings Trade In PEA Picker Portfolio

Today we placed the following orders in the PEA Picker portfolio at Terry’s Tips (this is the portfolio that has enjoyed eight consecutive gaining plays without a loss).

May 21, 2013 Trade Alert – PEA Picker Portfolio – LIMIT ORDER

I wrote a Seeking Alpha article about this play if you are interested – How To Play The Salesforce.com Earnings Annou…

In this article I suggested buying June options for the long side but I have since noticed that the July options are less than $.50 more expensive and seem to have tighter bid-ask ranges.  These spreads should make a gain in either direction as long as the stock fluctuates less than 10% in either direction (from its current price of $46.50) after the announcement, assuming that IV of the July options will only fall by 8 (from 36 to 28):

BTO 8 CRM Jul-13 50 puts (CRM130720P50)
STO 8 CRM May4-13 47.5 puts (CRM130524P47.5) for a debit limit of $2.48  (buying a diagonal)

BTO 5 CRM Jul-13 50 calls (CRM130720C50)
STO 5 CRM May4-13 50 calls (CRM130524C50) for a debit limit of $.78  (buying a calendar) 

Happy trading.
 
Terry