DE Analysis

Deere & Co. (DE)

Update 11/22/2017: DE reported earnings of $1.57 per share, beating the consensus estimate of $1.43, with the stock opening $6.30 above the prior day’s close. I exited at 71.0% of maximum potential profit.

The Zacks algorithm anticipated a positive earnings surprise, with an earnings surprise predictor score of 1.32 in the context of a bullish (2) score.

Prior to the announcement the ADX marked an uptrend, at 36.96, with the +DI at 39.13 and the -DI at 12.79 for a ratio of 3.06.

DE closed the first trading session after earnings were published up $6.02 from the pre-earns closed, within the four-quarter maximum span of $10.16, the average of $6.54 and the central tendency of $7.45, irrespective of direction.

Shares rose by 3.1% ove rmy holding perio dof less than a day, or a +1,128% annual rate. Tye options position produced a +245.2% return for a +89,4845 annual rate.

DE publishes earnings on Wednesday before the opening bell.

I shall use options that trade for the last time 24 days hence, on Dec. 15.

Implied volatility stands at 30%, which is triple the VIX, a measure of the volatility of the S&P 500 index.

DE’s IV stands in the 64th percentile of its annual range and the 85th percentile of its most recent broad movement.

The price used for analysis was $138.76.

Premium: $1.07 Expire OTM
DE-vertical Strike Odds Delta
Long 132.00 729.0% 24
Break-even 137.07
Short 136.00 63.3% 34

The premium is 26.6% of the width of the position’s wings.

The risk/reward ratio is 2.7:1.

The bid/ask spread is 31.0-%.

Decision for My Account

I have entered a position on DE as described above. The stock at the time of entry was priced at $139.12.

By Tim Bovee, Portland, Oregon, November 21, 2017


Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.

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