Options Trades for the Week of July 20th...

With a slew of earnings scheduled for this week, here are a couple of options trades that can take advantage of catalyst driven volatility while covering your ass at the same time… let the backspreads begin:

1  1) AAPL reports earnings after the market closes on Tuesday and you needn’t look any further to see the breakout possibilities of a sleeping giant stock than last week’s GOOG price action.  

The trade is a call ratio backspread: 

Short 1 July 24^thexpiration $127 Call for $4.50

Long 7 July 24^thexpiration $136 Calls for $0.85

This trade gives you +79 delta points and has a breakeven price of $138.02.  The downside risk is -$145 in the case of a miss or -$1,033 if the stock finishes at $136/share on Friday the 24^th.   

The upside is as follows:

$140payout = 1:1 max risk

$150 payout = 7:1 max risk

$160payout = 13:1 max risk

2  2) GPRO saw its value nearly cut in half between September and March but has clawed its way back to $56… a good quarter for a growth stock that has been through the ringer can definitely lead to some nice price action.  GPRO also reports Tuesday after the close.

          Here’s the trade:

          Short 1 July 24^th exp $54 call for $4.2

          Long 7 July 24^th exp $62.5 calls for $0.92

The trade gives you +97 delta points and has a breakeven price of $64.39.  The downside is limited to a maximum loss of -$1,063 if GPRO closes Friday at $62.5 and loss of -$224 if the stock finishes the week below $54.  On the upside, the payouts are as follows:

          $66payout = 1:1 max risk

          $70payout =  3.5:1 max risk

          $75payout =  6.5:1 max risk