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Duane White
6 years ago
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68 per share relative to our short puts) Total Credit on Put Side of Trade $0.43 Per Share STO May15 $95.00 Strike Calls- $2.60 Credit BTO May15 $100 Strike Calls - $0.

1 April 6, 2015 The best weekly newsletter for the serious options trader. The Signal By Safe Option Strategies The Safe Option Strategy Starbucks Corp. (SBUX) Iron Condor Plus The Safe Option Strategy STO May15 $92.50 Strike Puts- $2.11 Credit BTO May15 $87.50 Strike Puts - $0.84 Credit X2 (twice the number of long put contracts is $0.84 X 2 or $1.68 per share relative to our short puts) Total Credit on Put Side of Trade $0.43 Per Share STO May15 $95.00 Strike Calls- $2.60 Credit BTO May15 $100 Strike Calls - $0.95 Credit X2 (twice the number of long call contracts is $0.95 X 2 or $1.90 per share relative to our short puts) Total Credit on Call Side of Trade $0.70 Per Share Total Credit on both sides of the trade is $1.13 Per Share Max Risk is $3.87 Per share (biggest spread ($5.00) minus the total credit for both sides of the trade). Limit Credit Order of $1.00 to open the trade Target ROI is 20% Max ROI if 30% Target time in trade is < 30 days Trade Explanation of the Iron Condor Plus Click on the link above to see the definition of the spread trade.

2 Company Profile Brief: Starbucks Corp is the roaster, marketer & retailer of specialty coffee in the world, operating in 65 countries. It sells a variety of coffee & tea products. It sells goods and services under brands under Teavana, Tazo, Seattle's Best Coffee, etc. subscribers own potential risk.2

3 Company Technical s Summary When Starbucks reports in a little over a week, the stock should move, and move big. Whether up or down, we can capture a credit on one side of the move, and make a profit on the other side of the move, if the move is big enough. subscribers own potential risk.3

4 The Primary Exit Plan A flattening of the stock price (trading within a range) would be the best scenario for this trade. If the stock stays between the strike of the short call and the short put long enough to see significant extrinsic value bleed off, the trade will be closes. If this happens before expiration, the full profit potential would be unlikely, but a smaller target profit could be reached. Adjustment for Bullish or Bearish Trend If the stock moved above the short call strike, or below the short put strike, the winning side of the trade would simply be left alone to expire worthless and therefor book its full credit at expiration. The losing side of the trade could be left alone, provided the move up or down were sufficient to see the long option gain value in excess of the max loss on that side of the credit spread. If the stock price did not move far enough, the trade could be adjusted by selling some (up to half) of the long options on the losing side, and adding short options to the winning side to bring in more credit. subscribers own potential risk.4

5 Trade Updates ADBE In the Money Bear Put (3/30) We opened the trade, and then the stock held some support and moved up in price. We do not have to adjust right now, because we do not have technical crossovers to the bullish side. However, we have to watch close, because we cannot wait long to adjust if the technicals support doing so. COST Bull Call Calendar (03/23) We are fractionally better than break even on this trade, but it is moving our direction, and that is good. No adjustment needs to be made right now. SWHC Call Calendar (03/16) Because we are in a bear call calendar now, we do not need to adjust yet. Possibly soon. NKE Call Ratio Back Spread (03/02) We made an adjustment to NKE last week, and the stock has not moved much since. No change to be made right now. VLO Iron Condor (02-09) Back and forth we go! VLO has had a sharp move down, but it is working for our trade because of the big credit we took in on the new short calls. We are technically crossed over on the MACD and on the RSI, but not on the 5/20 Day EMA yet. No change to be made today. COST Bear Call (01/05) No change to this trade right now. subscribers own potential risk.5

6 APPL Bull Call (12/22) Today s move up helped, but we need more. No change today, but a possible adjustment will come in the next day or two unless we keep moving up. RHT Bear Put Calendar (10/20) Still looking great. No change needed today. GRMN Put Calendar (5/12) Great collar on this trade. No change needed today. Watch for the Signals Watch the Reports Signals to Watch for in the Upcoming Week and Why. Economic Reports Apr 06 ISM Services Mar Apr 07 JOLTS - Job Openings Feb Apr 07 Consumer Credit Feb Apr 08 MBA Mortgage Index 04/04 Apr 08 Crude Inventories 04/04 Apr 08 FOMC Minutes 3/18 Apr 09 Initial Claims 04/04 Apr 09 Continuing Claims 03/28 Apr 09 Wholesale Inventories Feb Apr 09 Natural Gas Inventories 04/04 Apr 10 Export Prices ex-ag. Mar Apr 10 Import Prices ex-oil Mar Apr 10 Treasury Budget Mar ISM Services Highlights The ISM Non-Manufacturing Index increased to 56.9 in February from 56.7 in January. The Briefing.com Consensus expected the index to fall to Key Factors The improvement in the headline index comes despite weakness in production and orders. The Business Activities/Production Index fell to 59.4 in February from 61.5 in January. The New Orders Index declined to 56.7 in February from 59.5 in January. Order backlogs improved (53.0 from 49.0), which should help production growth over time. The Employment Index increased to 56.4 in February from 51.6 in January. Big Picture The market generally doesn't pay much attention to the services index because the services sector is less cyclical than the manufacturing sector. To that end, February marked the 61st consecutive month in which economic activity in the non-manufacturing sector has expanded. subscribers own potential risk.6

7 Consumer Credit Highlights Consumer credit increased by $11.6 bln in January after increasing an upwardly revised $17.8 (from $14.8 bln). The Briefing.com Consensus expected consumer credit to increase by $14.0 bln. Key Factors Typically, consumer credit goes through sizable revisions before the final numbers are released. Any future revision, however, is unlikely to alter the current trends. Revolving credit declined by $1.2 bln in January, from $889.0 bln in December to $887.9 bln. Nonrevolving credit increased to $2,440.0 bln in January from $2,427.3 bln in December, a gain of $12.7 bln. Big Picture Consumer credit has increased by an average of $14.6 bln over the last three months. Initial and Continuing Claims Highlights The initial claims level declined to 268,000 for the week ending March 28 from an upwardly revised 288,000 (from 282,000) for the week ending March 21. The Briefing.com Consensus pegged the initial claims level at 285,000. The continuing claims level fell to mln for the week ending March 21 from a downwardly revised mln (from mln) for the week ending March 14. The consensus expected the continuing claims level to increase to mln. Key Factors That is the lowest initial claims level since the end of January. According to the Department of Labor, there were no special factors that impacted the claims level. The drop in claims seems to be signal of improved labor market conditions. Big Picture Initial claims have returned to a sub-300,000 trend. Wholesale Inventories Highlights Wholesale inventories increased 0.3% in January after a downward revision revealed no change (from +0.1%) in December. The Briefing.com Consensus expected wholesale inventories to decline 0.1%. Key Factors Surprisingly, the sharp drop in petroleum prices did not lead to a large decline in petroleum inventories. These inventories only declined 1.1% in January after declining 7.2% in December. Altogether, nondurable goods inventories declined a modest 0.1% in January. The small decline in nondurable inventories was more than offset by a 0.6% increase in durable inventories. Large gains were recorded in electrical (+2.4%), autos (+1.6%), and metals (+1.5%). Wholesale sales declined 3.1% in January after declining 0.9% in December. While some of the January decline was due to price shifts in oil prices -- petroleum sales fell 13.5% - - weak sales occurred in most of the wholesale sectors. The inventory-to-sales ratio spiked to 1.27 in January. That is the largest ratio since it reached that same level in July Big Picture Wholesale inventories are just one component of total business inventories. Manufacturing and retail inventories make up the rest of total business inventories. The market ignores this release and doesn't pay much attention to the full business inventory release that comes a few days later. Improved inventory management in recent years has reduced the economic swings associated with inventories and has helped produce a long-term downtrend in the inventory-to-sales ratio. subscribers own potential risk.7

8 Treasury Budget Highlights The Treasury budget showed a deficit of $192.3 bln in February 2015, down from a deficit of $193.5 bln in February The Treasury data are not seasonally adjusted, and the February deficit cannot be compared to the $17.5 bln deficit recorded in January. The Briefing.com Consensus expected a budget deficit of $192 bln. Key Factors The February deficit nearly matched the CBO's forecast of a deficit of $192.0 bln. Total outlays decreased to $331.7 bln in February 2015 from $337.9 bln in February 2014, a difference of $3.2 bln. Total revenues declined by $5.0 bln, from $144.3 bln in February 2014 to $139.4 bln in February Fiscal year-to-date, the deficit is $386.5 bln versus $376.4 bln for the comparable period in FY14. Big Picture Raw data available at: nt.htm subscribers own potential risk.8

9 The Watch List Symbol AAPL 4/21 ADBE 6/16 BA 4/21 BBY 5/20 BIDU 4/22 CAT 4/23 COST 5/27 CVX 4/30 DE 5/22 DIS 5/5 EBAY 4/22 F 4/28 FB 4/21 FSLR 5/4 GRMN 4/28 HD 5/19 MON 4/1 NFLX 4/20 NKE 6/24 P 5/5 RHT 3/25 SBUX 4/23 SNDK 4/15 SWHC 6/17 TSLA 5/5 TM 5/6 UA 4/22 V 4/22 VLO 4/23 WBA 4/9 XOM 4/29 Earnings subscribers own potential risk.9

The Iron Condor Plus The iron condor trade combines a bull put spread with a bear call spread, usually with the stock price currently trading between the two short option strike prices (i.e. if a stock were trading at $47.

10 The Iron Condor Plus The iron condor trade combines a bull put spread with a bear call spread, usually with the stock price currently trading between the two short option strike prices (i.e. if a stock were trading at $47.50 per share, the short put strike price would be below, and the short call strike above $47.50). The expectation is that the stock price would finish between the short option strikes, and both sides of the trade would expire worthless. In the Iron Condor Plus, the trade simply uses a call ratio back spread, and put ratio back spread, instead of the bear call and the bull put. This allows the trade to be more easily adjusted if the stock price moves up or down, and beyond the strike of either the short put or short call. subscribers own potential risk.10

By Safe Option Strategies

May 11, 2015 The best weekly newsletter for the serious options trader. The Signal By Safe Option Strategies www.safeoptionstrategies.com The Safe Option Strategy Deere & Co (DE) Call Ratio Back Spread