I entered a shares position on COST timed to coincide with earnings. I also entered an options position on the symbol on the symbol.
ORCL shares rose after the company beat analysts estimates, allowing a profitable exit.
| sym | entry | exit | result ($) | result (%) | entry date | exit date |
| COST | 186.86 | 193.27 | 6.41 | 3.4% | 12/14 | 12/15 |
| zacks rank | zacks esp | DI spread | ADX | earns est. | earns actual | |
| 3 | 1.39 | 26.36 | 47.92 | 1.35 | 1.45 |
By Tim Bovee, Portland, Oregon, Dec. 14, 2017
Oracle Corp. (ORCL)
Update 12/15/2017: ORCL’s earnings of $0.70 per share beat analysts’ consensus estimate of $0.69 by 1.1%. Shares dropped about $5 in after-hours trading, rising only slightly the next day after the opening bell. I exited for a loss.
Shares fell by 4.7% over my holding period of less than a day, or a -1,724% annual rate. The options position produced a 9.9% loss for a -3,622% annual rate.
As I entered the trade ORCL had a neutral (3) Zacks rank with an earnings surprise predictor (ESP) of -0.42%. Shares were showing a weak bull trend, with an average directional index (ADX) of 17.5 and a DI gap (+DI minus -DI) of 10.31. The ADX stood in the 11th percentile of its recent range.
ORCL’s fall from the pre-earns closing bell to the end of the first session of the announcement was $1.89, within the $2.33 average of the last four earnings announcements, the $3.33 central tendency and the $4.05 maximum.
The expected price move, with 85% accuracy, of $2.33 was eclipsed by a decline that, at its maximum, was down $3.19. The movement broke was close to being contained by the $3.14 profit zone to the downside, breaking below it by 5 cents.
ORCL publishes earnings on Thursday after the closing bell.
I shall use options that trade for the last time eight days hence, on Dec. 22.
Implied volatility stands at 29%, which is 2.9 times the VIX, a measure of the volatility of the S&P 500 index.
ORCL’s IV stands in the 96th percentile of its annual range and most recent broad movement.
Jabil Inc. (JBL)
Update 12/15/2017: JBL’s earnings of $0.80 per share came in 1.6% below the Street estimate of $0.81. Shares rose a dollar in after-hours trading after the announcement, stayed high overnight, and then a dollar in the 10 minutes before the opening bell and the first 10 minutes of the session. I exited soon after the open at 31.5% of maximum potential profit.
Shares rose by 1.7% during my holding period of less than a day, or a +637% annual rate. the options position produced a 46% return for a +16,790% annual rate.
Going into the trade Zacks gave JBL a neutral rank (3) with no expectation of an earnings surprise. The average directional index (ADX) stood at 17.4, with a directional index gap (+DI minus -DI) of -7.48, a bearish reversal. The ADX stood in the 45th percentile of its most recent broad movement.
JBL rose $0.42 from the pre-earns close to the end of the trading the first session after the announcement, stay well within the $1.54 average movement of the past four announcements, the central tendency of $1.24 and the maximum of $2.58.
The expected move of $1.55 contained JBL’s maximum rise of $1.13, which also stayed within the upside profit zone, $1.46.
JBL publishes earnings on Thursday after the closing bell.
I shall use options that trade for the last time eight days hence, on Dec. 22.
Implied volatility stands at 36%, which is 3.5 times the VIX, a measure of the volatility of the S&P 500 index.
JBL’s IV stands in the 78th percentile of its annual range and the 82nd percentile of its most recent broad movement.
Costco Wholesale Corp. (COST)
Update 12/15/2017: COST’s earnings beat the Street estimate of $1.35 per share by 7.%, coming at $1.45. Shares rose in overnight trading by more than $10, then at the opening bell dropped off by about $2 and went into a sideways trend. I exited at 1.7% of maximum potential profit.
Shares rose by 3.6% during my holding period of less than a day, for a +1,316% annual rate. The options position produced a 1.7% return for a +624% annual rate.
Going into the trade COST had a neutral (3) rank from Zacks, with an earnings surprise predictor (ESP) of 1.39%. The shares uptrend was strong, with an average directional index (ADX) of 47.9, which is at the peak of the most recent broad movement. The DI gap between the directional indices (+DI, -DI) was 26.4.
From the pre-earns close to the end of the first trading day after the announcement, COST rose $6.20, slightly more than the average movement of $6.14. well below the maximum move of $9.98 and greater than the central tendency of $5.73.
The expected price move, with 85% accuracy, of $6.14 was eclipsed by the actual maximum move of $8.82 and broke free of the $6.55 upside profit zone.
Click here for the associated shares trade results.
COST publishes earnings on Thursday after the closing bell.
I shall use options that trade for the last time eight days hence, on Dec. 22.
Implied volatility stands at 24%, which is 2.4 times the VIX, a measure of the volatility of the S&P 500 index.
COST’s IV stands in the 93rd percentile of its annual range and the 89th percentile of its most recent broad movement.
I have entered an earnings play on PAY using long shares as a vehicle.
Although PAY beat the Street consensus earnings estimate, the company provided forward outlook that resulted in a price decline immediately after the opening bell.
| sym | entry | exit | result ($) | result (%) | entry date | exit date |
| PAY | 18.53 | 17.39 | -1.14 | -6.2% | 12/12 | 12/13 |
| zacks rank | zacks esp | DI spread | ADX | earns est. | earns actual | |
| 3 | 0.58 | 6.13 | 34.74 | 0.43 | 0.44 |
By Tim Bovee, Portland, Oregon, Dec. 12, 2017
12/12 – 3 p.m. New York time
In today’s outcomes, I entered one new position, a shares position in PAY, and exited none.
12/11 – 3:10 p.m. New York time
As it turns out RMR is unsupported by Robinhood, the no-fee brokerage I use for earnings plays using shares. No, no trade, and that means no outcomes today.
Tim Bovee, Private Trader 
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