Cisco Systems Inc. (CSCO)

Update 11/16/2017: CSCO beat its earnings estimate of $0.60 by a penny, coming in at $0.61. Shares opened $1.93 higher after the announcement. With an opening gap that large, I exited and took the loss.

CSCO went into the announcement with a neutral rating from Zacks with a small expectation of an upside earnings surprise (0.29 on the earnings surprise predictor) and a beta of 1.15.

The share price rose by $1.77 from the pre-earns close to the first close after earnings were published. The movement overshot the profit zone by 27 cents and the expected move, with 85% confidence, by 69 cents. It remained, however, within the average move and central tendency of the four prior quarterly earnings announcements.

Shares rose by 6.8% over my holding period of less than a full day, or a +2,484% annual rate. The options position produced a -35.1% loss on debit for a -12,824% annual rate.

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CSCO publishes earnings on Wednesday before the opening bell.

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

Implied volatility stands at 27%, which is 1.9 times the VIX, a measure of the volatility of the S&P 500 index.

CSCO’s IV stands at the peak of its annual range and its most recent broad movement.

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11/15 – 3:25 p.m. New York time

My electric power is back and I am once again fully operational. It feels very odd to be cut off from the markets on a trading day. Just saying.

In today’s outcomes, I entered an options position on CSCO and share positions on WGL, HP, SFS and STNG, and exited shares positions on AUPH and MTOR. The analyses of positions I exited have been updated with results.

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Shares trades in connection with earnings announcements: AUPH and MTOR. I exited AUPH for a loss and MTOR for a profit.

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11/14 – 3:50 p.m. New Yor time

I entered two positions today, both of them earnings plays using shares as a vehicle: AUPH and MTOR. I exited an options-based earnings play on HD.

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The Home Depot Inc. (HD)

Update 11/14/2017: HD’s earnings did slightly better than analysts expected, coming in at $1.8354, compared to the forecast of $1.81. The price opened down $1.71 at the opening bell after the announcement. I exited for a loss.

The Zacks earnings surprise predictor algorithm, at 0.57, suggested that there would be an earnings surprise, in the context of  a bullish score (2) and a beta of 1.08.

The share price rose by $2.71 from the pre-earns closing bell to the first close after earnings were published, 13 cents more than the average move of the four prior quarters and 6 cents beyond the central tendency.

Shares declined by 1.4% over my one-day holding period, or a -614% annual rate. The options position produced a -21.2% loss for a -7,718% annual rate.

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HD publishes earnings on Tuesday before the opening bell.

I shall use options that trade for the last time 32 days hence, on Dec. 15.

Implied volatility stands at 22%, which is double the VIX, a measure of the volatility of the S&P 500 index.

HD’s IV stands in the 71st percentile of its annual range and the 86th percentile of its most recent broad movement.

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11/13 – 2:55 p.m. New York time

HD analysis posted.

11/13 – 2:40 p.m. New York time

I have updated JD with results.

11/13 – 9:50 a.m. New York time

I have exited JD for a profit and shall update the analysis with results later in the day/

HD’s earnings surprise score remains a bit lower than I like, but high enough to trade using options if I’m of a mind. The bid/ask spread on a directional bull trade is sufficiently low to meet my standards. The non-directional  spread is overly high and so is off the table unless it improves.

None of the potential earnings plays using shares — DKS, ICON, MTSC, NCSM, SBBP, SSYS and VRS — meets my standards, on two grounds: I require that the Zacks score be neutral or bullish (3 or greater) and that the earnings surprise predictor be positive (>0). Only HD meets that standard, and since it qualifies for an options trade, its off the table for shares.

i anticipate no new data from Zacks prior to the closing bell, so the shares prospects are off the table.

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Two price reports are on the economic reporting agenda this week: The consumer price index on Wednesday and the producer price index for final demand on Tuesday, each at 8:30 a.m. New York time.

Several portions of the economic pie will also come under scrutiny. Retail sales for October, out Wednesday at 8:30 a.m., will provide a baseline for the holiday shopping season. The factories that those presents and much more will show up in the industrial production on Thursday at 9:15 a.m., and the ever influential business of providing roofs over people’s heads, housing starts, will be published on Friday at 8:30 a.m.

Fed Gov. Lael Brainard talks about fintech — the financial technology that is remaking our economy — at the Financial Stability Conference in Ann Arbor, Michigan, on Thursday at 3:45 p.m. New York time. The even will be livestreamed here.

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Tyson Foods Inc. (TSN)

TSN publishes earnings on Monday before the opening bell.

I shall use options that trade for the last time 14 days hence, on Nov. 24.

Implied volatility stands at 32%, which is triple the VIX, a measure of the volatility of the S&P 500 index.

TSN’s IV stands in the 74th percentile of its annual range and the 96th percentile of its most recent broad movement.

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JD.com Inc. (JD)

Update 11/13/2017: JD reported earnings of $0.1192 per share, beating the Street estimate of $0.10. The share price rose by more than $4 before the opening bell but dropped back by the start of general trading.

Zacks had forecast no earnings surprise in the context of a neutral score (3) and a 1.40 beta.

JD shares closed $1.38 higher the first trading day after earnings were published compared to the final pre-earnings close. That puts the move within the expected 85% chance move of $2.82 and all three post-earns moves metrics of the past year: the average of $1.85, the maximum of $2.77 and the central tendency of $2.18.

During the lifespan of my position, shares rose by 1.4% over three days (including the weekend), or a +174% annual rate. The options position produced a +33.0% return for a +4,019% annual rate.

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JD publishes earnings on Monday before the opening bell.

I shall use options that trade for the last time 14 days hence, on Nov. 24.

Implied volatility stands at 45%, which is 4.1 times the VIX, a measure of the volatility of the S&P 500 index.

JD’s IV stands in the 56th percentile of its annual range and the 87th percentile of its most recent broad movement. 

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11/10 – 3:15 p.m. New York time

Outcomes: I entered an earnings play using options on JD but passed on a similar play on TSN after analysis. I exited three earnings plays using shares: CLMT, ESES and PBYI.

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