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.

I shall report on the first-trading-day move after the closing bell.

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.

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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.

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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.

I shall update with relative post-earns movements after the closing bell.

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.

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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.

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