I have one potential earnings play with sufficient liquidity to warrant a further look on Tuesday, the first trading day after a three-day weekend in U.S. markets to observe the President’s Day holiday.

However, the prospect — TJX — has implied volatility that is a bit low in relation to its most recent broad movement, and even lower in connection with the one-year range. I shall analyze TJX further only if one or the other of those metrics rises to the 50th percentile or better of the range.

By Tim Bovee, Portland, Oregon, Feb. 17, 2017

 

I entered an earnings play on WMT. The company publishes earnings on Tuesday before the opening bell, but I entered on Friday, earlier than is my usual practice, because Monday is a market holiday.

I exited no positions.

By Tim Bovee, Portland, Oregon, Feb. 17, 2017

 

Wal-Mart Stores Inc. (WMT)

Update 3/21/2017: WMT gapped down sharply on the fifth trading day after earnings were published and afterward traced out a zig-zag, the sign of a sideward trend. I exited at 12.9% of maximum potential profit, a bit more than half of my normal 25% target.

The WMT position had about 50% more dollar-value risk than my guidelines suggest, an effect of the interaction between the strike prices and the options premium. I took the early exit because of uncertainty over how the sideways trend would resolve itself. Had the strike price fallen, I would have had plenty of cushion to keep the position profitable. But a rise of only $2 would have made the position unprofitable.

In exiting I eliminated the risk and attained my dollar-value goal. However, I fell short of my percentage goal.

Shares rose by 1.6% over 32 days, or a +788% annual rate. The options position produced a 14.9% yield on debit for a +169% annual rate.

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WMT publishes earnings on Tuesday before the opening bell. U.S. markets are closed on Monday for the Presidents Day holiday.

I shall use the APR series of options, which trades for the last time 63 days hence, on April 21.

Implied volatility stands at 22%, which is 1.9 times the VIX, a measure of the volatility of the S&P 500 index.

WMT’s IV stands in the 52nd percentile of its annual range and the 97th percentile of its most recent broad movement.

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The agenda is empty, with no potential entries on my desk and no exits in sight. It is a day for study and reflection, while of course keeping an eye on my holdings.

By Tim Bovee, Portland, Oregon, Feb. 17, 2017

 

I have no prospective trades in sight for Friday.

By Tim Bovee, Portland, Oregon, Feb. 16, 2017

 

I had no prospective new positions on my desk today and entered no new positions. I exited no positions.

I am attempting an exit of my position on BP, but it has not yet been filled and appears unlikely to be at this point. If it should be filled before the closing bell, then I shall update Outcomes.

I am breaking off my trading early today to meet another commitment.

By Tim Bovee, Portland, Oregon, Feb. 16, 2017

 

I have no prospective trades for analysis on Thursday.

By Tim Bovee, Portland, Oregon, Feb. 15, 2017

 

I entered no new positions. I exited a position on INTC for a profit.

By Tim Bovee, Portland, Oregon, Feb. 15, 2017

 

CSCO, the one prospective trade on my desk this morning, continues to show declining implied volatility and is a bit too low compared to its annual and near-term ranges to qualify for further analysis.

I’ll check it again later in the day but for now, it doesn’t meet my criteria for trading.

By Tim Bovee, Portland, Oregon, Feb. 15, 2017

CSCO is the one earnings play sufficiently liquid for further consideration. However, implied volatility is overly low for my purposes in relation to both the annual range and the most recent broad movement. I shall look at the numbers on Wednesday and make a decision regarding further analysis.

By Tim Bovee, Portland, Oregon, Feb. 14, 2017