Trade Alert: If a tree falls…

Juniper was a tree long before it was the name of a router company. Get it? If a tree falls…? Sigh, not funny, huh? I tried.

Anyway, I’m also buying some Juniper calls dated out into this summer, from June on, and with strike prices around $21 or so. The premiums are very cheap on these and if the stock rallies at all, we’ll have a great payoff on very little capital outlay. As I always, always, always remind you, any pre-earnings trade, especially when using options, is as much a gamble as it is a “trade”, but I’ve also had a lot of success over the years by being selective about making these bets when the risk/reward from the payoff on the option looks favorable. If you can get paid a double or triple on the payoff, you only need to be right a little more than half the time over the course of your investing career to make these trades worth the risk.

But to be clear, this Juniper calls trade is not the crux of my strategy and it shouldn’t be the focus of your strategy either. It’s a part of an overall approach that I have successfully taken to the market for a long time, but as you saw yesterday with my blown Netflix trade when these trades don’t work, they truly don’t work. So don’t risk any more than a small amount of capital on any single earnings gamble/trade.