I’ll be looking at up to five earnings plays on Tuesday. No volatility plays unrelated to earnings announcements passed my initial analysis.
Author: Tim Bovee
Monday’s Outcomes
I entered a position on GIS timed to coincide with earnings.
I exited an earnings play on ADBE for a profit.
I considered entering earnings plays on DRI, KMX and CCL, but their options grids wouldn’t allow me to construct a risk/reward ratio to my liking. I prefer that the ratio be close to even for such iron fly positions. All were skewed by quite a bit more.
By Tim Bovee, Portland, Oregon, Dec. 19, 2016
GIS Analysis
General Mills Inc. (GIS)
GIS publishes earnings on Tuesday before the opening bell.
Update 12/27/2016: GIS dropped after earnings were published but recovered to near the strike price within a few days. I exited at 25% of maximum profit, my standard goal for positions of this sort.
Shares declined by 1.2% over eight days, or a -56% annual rate. The options position produced a 29.34% yield on debit for a +1,339% annual rate.
Monday’s Agenda
I have four earnings prospects on my desk this morning, and I have room in my holdings for two of them.
GIS has the best implied volatility profile of the batch, so I’ll analyze it first. DRI and KMX are similar in their relative volatilities; I’ll try DRI first, with KMX as a fallback.
CCL is fairly low in the annual percentile, at the 40th, and so I shall analyze it as a last resort.
By Tim Bovee, Portland, Oregon, Dec. 19, 2016
The Week Ahead: GDP, durables, income, homes
The biggest, broadest overview of how the economy is doing will be published Thursday at 8:30 a.m. New York time, the third and presumably most accurate report on the 3rd quarter gross domestic product.
Monday’s Prospects
AMAT Analysis
The manufacturer of semiconductors and other computing components Applied Materials Inc. (AMAT), headquartered in Santa Clara, California, publishes earnings on Thursday after the closing bell.
[AMAT in Wikipedia]
Update 12/30/2016: AMAT rose after earnings were published and remained well above its entry point when I exited for a profit. The gain in the value of the options position came from a sharp decline in implied volatility combined with the working of time decay in my favor.
Shares rose by 5.4% over 43 days, or a +45% annual rate. The options position produced a +94.1% yield on debit for a +799% annual rate
Friday’s Outcomes
I exited an earnings play on ORCL the day after entering it.
By Tim Bovee, Portland, Oregon, Dec. 16, 2016
Friday’s Agenda
I have no new positions on the table today.
By Tim Bovee, Portland, Oregon, Dec. 16, 2016
Friday’s Prospects
No prospects on my list for Friday. I have already opened positions on the credible high-volatility plays, and I have no earnings announcements for action.
By Tim Bovee, Portland, Oregon, Dec. 15, 2016
Tim Bovee, Private Trader 
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