ADSK Analysis

Autodesk Inc. (ADSK)

Update 11/30/2017: ADSK published earnings of a $0.12 per share loss, well below the Street estimate of a $0.1003 loss. In after hours trading share prices immediate drop $20 in 5 minutes. I exited for a loss.

Shares declined by 13.7% over the two-day existence of the position, or a -2,504% annual rate. The options position produced a -72.2% loss for a -13,181% annual rate.

The 12 analysts watching ADSK had anticipated a positive earnings surprise, issuing assessments implying an earnings surprise predictor score of 4.23 in the context of a neutral (3) longer-term expectation.

The $20.61 movement from the pre-earnings close to the end of the first post-earns session was larger than any among the prior four quarterly announcements.

The trend metrics showed ADSK as uptrending, with an ADSK of 30.79 with a +DI of 26.75 and a -DI of 15.00.

All in all, ADSK defied all metrics and every expectation.

ADSK publishes earnings on Tuesday after the closing bell.

I shall use options that trade for the last time 17 days hence, on Dec. 15.

Implied volatility stands at 40%, which is 3.9 times the VIX, a measure of the volatility of the S&P 500 index.

ADSK’s IV stands in the 64th percentile of its annual range and the 84th percentile of its most recent broad movement.

The price used for analysis was $127.52.

I used a bull put spread structure for the trade, since the metrics suggested an upside move is more likely.

Premium: $1.05 Expire OTM
ADSK- vertical Strike Odds Delta
Long 120.00 78.9% 23
Break-even 125.05
Short 124.00 62.8% 34

The premium is 26.3% of the width of the position’s wings.

The risk/reward ratio is 2.8:1.

The biggest immediate move after each of the past four earnings announcements was $14.08, and the average was $5.89. After eliminating the maximum and minimum post-earnings movements, the central tendency is $3.73.

The bid/ask spread is 34.6%.

Decision for My Account

I have entered a position on ADSK as described above. The stock at the time of entry was priced at $128.37.

By Tim Bovee, Portland, Oregon, November 28, 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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