KBH Trade - 22/3/06

On 21/3/06 AMC (after market close), NKE reported 3rd quarter earnings of $1.24 per share, 14cts better than the Reuters Estimates consensus of $1.10. Revenues rose 9.0% year/year to $3.61 Billion vs the $3.53 Billion consensus.

On 22/3/06, NKE gapped down $0.20 when market opened. I Sold my NKE Apr 85 Call for $1.85 at a loss of $0.55. I bought the call option at $2.40 on 21/3/06. I sold too fast because NKE rebounded to $85.75 around 10.07am EST and the call could fetch $2.30. Would remember this next time, though I felt the option was a little expensive to buy in the first place anyway (I consider an option with time value > $2 expensive, remember, it's time value, not intrinsic value)

Tonight, KB Home (KBH) would be reporting earnings AMC. Would try buying a Apr 60 Put at a limit order of $0.95 in the understanding that the housing sector might be entering a cyclical slowdown.