Earnings Primer: 10/20 - 10/22

The following is a detailed look (from an options perspective) of companies reporting earnings over the next 3 days. We'll look at historical results, expected moves, and other relevant info to help inform an educated decision for these events. The current price is based on the price at market close on Tuesday, and the implied move is based off of Thinkorswim's "Market Maker Move" which has historically provided accurate post-earnings ranges.

 

Tesla (TSLA)

Date: Wednesday, After-Hours

Current Price: $864.27

Implied Move: $32.01 (3.70%)

Expected Range: 832.26 - 896.28

Previous Results:

Expected Range, plotted on 180d chart:

Thoughts: From the 180d chart it's pretty clear to see that TSLA has started to run away again. I wouldn't want anything bullish on this trade because if it falls back down it has a long way to go. There does look to be some resistance from the beginning of the 180d chart above so if I were to do anything I would sell a call credit spread just outside the top of the expected range.

 

AT&T (T)

Date: Thursday, before market open

Current Price: 25.59

Implied Move: 0.69 (2.70%)

Expected Range: 24.90 - 26.28

Previous Results:

Expected Range, plotted on 180d chart:

Thoughts: T is a steady stock that has been in a big time downtrend lately. The bleeding stopped at the 25 level which should act as some sort of support and then the bottom end of the expect range is 24.90. I'm a fan of the weekly 25p which offer $0.16 of premium and a 0.66% return on risk.

 

Southwest (LUV)

Date: Thursday, before market open

Current Price: 49.38

Implied Move: 1.63 (3.30%)

Expected Range: 47.75 - 51.01

Previous Results:

Expected Range, plotted on 180d chart:

Thoughts: The travel space has been pretty beat up lately. United airlines moved up slightly after earning yesterday so I would expect something similar. The bottom end of the expected range, as seen above, lines up nicely with some support on a 180d basis. Would be happy to sell a bullish position (CSP or put credit spread) with a strike anywhere at 48 or below. 48p currently offer a 0.89% return on risk.

 

Ally (ALLY)

Date: Thursday, Before Market Open

Current Price: 54.66

Implied Move: 4.01 (7.34%)

Expected Range: 50.65 - 58.67

Previous Results:

Expected Range, plotted on 180d chart:

Thoughts: Don't know a ton about ally other than the fact it's a financial services company. Pretty large expected move here at 7.34% but with the stock up so much in the last 180 days that's not too much of a surprise. A vertical credit spread doesn't look great and the 50p offer a 1.20% return on risk but I'm not sure that's enough to make me want to potentially take assignment at a 49.50 basis on this one.

 

Crocs (CROX)

Date: Thursday, Before Market Open

Current Price: 8.29

Implied Move: 0.84 (10.13%)

Expected Range: 7.45 - 9.13

Previous Results:

Expected Range, plotted on 180d chart:

Thoughts: Another trade with a large expected move and a big run up in the last 180 days. CROX is up over 100% in the last 180 days so if I were to do anything here it would be a vertical call spread to play it back down. Don't really have any reason to hate this company though so I'm staying away.

 

Snapchat (SNAP)

Date: Thursday, After-Hours

Current Price: 76.43

Implied Move: 6.91 (9.04%)

Expected Range: 69.52 - 83.34

Previous Results:

Expected Range, plotted on 180d chart:

Thoughts: First thing that sticks out to me here is that the expected range lines up almost perfectly with support and resistance on the chart. Iron condor isn't too bad of an idea right here. 67/69p and 84/86p offers a $0.80 credit and is just under a 50/50 bet that the stock remains within the expected move here. Not a bad idea.

 

Intel (INTC)

Date: Thursday, After-Hours

Current Price: 55.21

Implied Move: 2.05 (3.71%)

Expected Range: 53.16 - 57.26

Previous Results:

Expected Range, plotted on 180d chart:

Thoughts: Don't think anything too crazy will happen with this one, but the bottom end of the range lines up nicely with support and if anything, this looks like a decent entry on INTC. 53p are at the bottom end of the expected range and offer a 0.80% return.

 

Chipotle (CMG)

Date: Thursday, After-Hours

Current Price: 1841.14

Implied Move: 69.23 (3.76%)

Expected Range: 1771.91 - 1910.37

Previous Results:

Expected Range, plotted on 180d chart:

Thoughts: Another chart where support lines up with the bottom end of the expected move. Looks like resistance is a little outside the top end of the range so I'd stay away from an iron condor or vertical call spread here. I like the idea of a put credit spread with a short leg at 1770 or lower. Reason why I prefer a spread to a CSP here is the fact that there is a big gap down to the 1500-1600 level on the chart above so a spread will protect you from a potentially catastrophic move.

 

American Express (AXP)

Date: Friday, Before Market Open

Current Price: 177.31

Implied Move: 4.72 (2.66%)

Expected Range: 172.59 - 182.03

Previous Results:

Expected Range, plotted on 180d chart:

Thoughts: Nothing on this one looks too interesting. Not a big expected move so premium is ehh, and the expected range doesn't really line up with anything.