11/17 – 3:15 p.m. New York time
Today’s outcomes: I exited a shares position on SPLK for a profit, having passed on entering a shares position on SBLK (see below for reasons why).
Author: Tim Bovee
Shares: SPLK
Shares trades in connection with earnings announcements for acton on Nov. 16: SPLK. (Another satisfactory prospect, GLOB, is not supported by my platform for these trades, Robinhood Markets Inc.)
SPLK beat the Street earnings estimate, causing shares to rise sharply before the opening bell.
Live: Thursday, November 16, 2017
11/16 – 3:35 p.m. New York time
Outcomes: I entered SPLK as an earnings play using shares. I exited my options-based earnings play on CSCO and shares-based plays on WGL, HP, SFS and STNG.
Shares: WGL, HP, SFS and STNG
Shares trades in connection with earnings announcements for acton on Nov. 15: WGL, HP, SFS and STNG. I exited all four positions the next day on Nov. 16, HP and STNG for a profit and SFS for a wash. WGL was a loss, but there was no earnings announcement. It was moved forward to Nov. 22 after the closing bell.
CSCO Analysis
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.
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.
Live: Wednesday, November 15, 2017
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.
Shares: AUPH and MTOR
Shares trades in connection with earnings announcements: AUPH and MTOR. I exited AUPH for a loss and MTOR for a profit.
Live: Tuesday, November 14, 2017
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.
HD Analysis
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.
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.
Live: Monday, November 13, 2017
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.
You must be logged in to post a comment.