Live: Tuesday, Dec. 5, 2017

12/5 – 3:20 p.m. New York time

In outcomes, I exited GIII.

12/5 – 12:55 p.m. New York time

I’ve built a test position on AEO and in so doing, have found that the resulting bid/ask spread is higher than my standards allow, at 26% for an iron fly. Moving the two spreads apart to make it an iron condor raises the widens the spread as well. So I am passing on AEO without a full analysis. It is off my desk.

12/5 – 9:50 a.m. New York time

I have exited GIII for a profit. Also on my agenda, an earnings play on AEO using options. (The six other symbols on my checklist continue to show flaws and so I’m setting them aside.)

12/4 – 10:10 p.m. New York time

I have one earnings play that qualifies at this point for the final analysis: AEO, which appears to be liquid enough for an options position.

As it stands now I shall construct a bull put spread for the trade. The earnings surprise predictor (ESP) is lower than I prefer, at 0.68, although it is within the context of a bullish (2) Zacks score.

Two other earnings plays are close to qualifying but have flaws: PLAY has a low average directional index (ADX) but an ESP pointing toward a positive earnings surprise, presenting a conflict between a direction-neutral indicator and a bullish one. RH has implied volatility below the 50th percentile of the one-year range, a condition that requires a closer look.

The one potential earnings play using shares, OXM, has a low ADX and will drop from the list unless that characteristic improves.

Three other symbols in the shares-trade category have ESPs of zero and so won’t qualify for analysis unless that characteristic rises above a 1.0. They are BF.B, HQY and VRA.

By Tim Bovee, Portland, Oregon, Dec. 4-5, 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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