American Express Co. (AXP)

Update 1/17/2018: AXP moved into a downtrend as measured by the Fisher AXP metric. The price was already below the peak and earnings were the next day. I chose to eliminate the risk by exiting early.

Shares declined by 1.0% over five days, or a 70% annual rate. The options position produced a -5.0% loss for a -368% annual rate.

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I have entered a short iron fly spread on AXP, using options that trade for the last time 14 days hence, on Jan. 26. The premium is a $3.39 credit and the stock at the time of entry was priced at $100.80.

I made the decision to enter the trade in my account based on low probability of an earnings surprise and a downtrending Fisher Transform metric, which matches the greater likelihood of success on a price decline.

The profit zone for this position is between $104.39 on the upside and $97.39 on the downside.

AXP publishes earnings on Jan. 18 after the closing bell.

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International Business Machines Corp. (IBM)

I have passed on a short iron fly spread on IBM, using options that trade for the last time 14 days hence, on Jan. 26. The premium in the proposed position was a $3.00 credit.

I declined the trades because of  large skew toward the put side that raised the risk/reward ratio to 4:1, an unacceptable level for an iron fly.

The profit zone for this position would have been between $168 on the upside and $153 on the downside.

IBM publishes earnings on Jan. 18 after the closing bell.

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1/12 – 3:15 p.m. New York time

In today’s outcomes, I entered an earnings play using shares, AXP, and exited another, WFC. I analyzed IBM but declined the trade.

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Halliburton Co. (HAL)

Update 1/17/2018: HAL moved into a downtrend as measured by the Fisher Transform metric. Although the earnings announcement five days away, given the breadth throughout the markets of the downtrend signaling, I chose to exit to escape the risk of a move well beyond the profit zone.

Shares declined by 1.8% over nine days, or a -73% annual rate. The options position produced a 0.9% return for a 36.7% annual rate.

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I have entered a short iron fly spread on HAL, using options that trade for the last time 15 days hence, on Jan. 26. The premium is a $2.23 debit and the stock at the time of entry was priced at $53.19.

I made the decision to enter the trade in my account based on low expectations of an earnings surprise and a high implied volatility in relation to both the annual range and the most recent broad movement. It’s also a highly liquid stock.

The profit zone for this position is between $55.73 on the upside and $50.73 on the downside. I skewed the long put strike downward to accommodate my view that a post-earns decline is more likely than a rise.

HAL publishes earnings on Jan. 22 before the opening bell.
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I have entered an earnings play on FFBC using shares. The company will publish earnings on Jan. 18 after the closing bell.

The position has an uptrending Fisher Transform and a high chance of a positive earnings surprise, and as an added bonus, a very bullish Zacks rank.

FFBC, in common with the broad market, turned down on the 4-hour Fisher Transform. With earnings so close, I exited for a very small profit.

sym	entry	exit	result ($)	result (%)	entry date	exit date
FFBC	27.80	27.90	0.10	0.4%	1/11	1/17
	zacks rank	zacks esp	FisherTrans	FT spread	earns est.	earns actual
	1	6.67	0.56	0.473	0.44	TBD

By Tim Bovee, Portland, Oregon, Jan. 11, 2018

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1/11 – 3:15 p.m. New York time

I entered two positions today, HAL and FFBC. I exited two positions, BLK. and FXE. The latter is preparatory to a roll forward in a series. I decided to hold JPM and WFC through their earnings announcements on Friday before the opening bell.

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1/10 – 3:45 p.m. New York time

In outcomes, I placed one trade today, exiting UNH.

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I have entered an earnings play on BMRC using shares. I took the trade on the strength of a bullish, day old uptrend on the Fisher Transform metric and a relatively high score from the Zacks earnings surprise predictor. The position of the Fisher below the zero line theoretically gives the uptrend room to rise.

The Fisher Transform turned dow on the 4-hour chart and I exited for a profit, eight days before earnings were due to be published.

sym	entry	exit	result ($)	result (%)	entry date	exit date
BMRC	68.89	70.85	1.96	2.8%	1/8	1/16
	zacks rank	zacks esp	FisherTrans	FT spread	earns est.	earns actual
	1	3.49	-1.471	0.692	0.89	TBD

By Tim Bovee, Portland, Oregon, Jan. 9, 2017

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1/9 – 3:05 p.m. New York time

I entered one position today, an early earnings play on BMRC using shares.

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JPMorgan Chase & Co. (JPM)

Update 1/16/2017; JPM published earnings of $1.07 per share, well below the $1.73 Street estimate. The earnings surprise came after a price rise pre-earnings had carried beyond the upper boundary of the position’s profit zone.

Shares rose by 4.4% over eight days, or a +199% annual rate. The options position produced a 51.1% loss for a -2,355% annual rate.

The decline after earnings were published was insufficient to produce a profit, at the time I exited. I decided to get out because the trend metric remained bullish, suggesting a further push into unprofitable territory.

The interesting aspect of this trade, from my standpoint, is the decision I mad eon Friday to carry the position past the earnings announcement. Like many of my recent trades, I entered JPM more than a week before earnings announcement in order to profit from the pre-earns price movement. The position remained unprofitable on Friday, Jan. 12, the last day to exit before earnings were published.

I made the decision to hold JPM past earnings a day earlier, writing in the Jan. 11 live feed: “It has fallen after each of the last four earnings announcements. The expectation of an upside earnings surprise is very slim. I shall hold this one through the announcement, despite an uptrending Fisher Transform.”

JPM after the announcement indeed behaved as I expected; just not enough. The question, then, is whether it’s better to hold through earnings or get out? The key, I think, is my use of the word “despite”, as in “despite an uptrending Fisher Transform”. If I have one of my major indicators counseling against continuing to hold, I should get out. Period. “Despite” is a word that I should strike from my lexicon in making these decisions.

So despite the loss, I learned something from this trade, and knowledge is always a profitable return.

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I have entered a short iron condor spread on JPM, using options that trade for the last time 11 days hence, on Jan. 19. The premium is a $1.35 credit and the stock at the time of entry was priced at $108.36.

I made the decision to enter the trade in my account based on high implied volatility and reasonably close profit-zone coverage of the anticipated downside move.

The profit zone for this position is between $111.35 on the upside and $103.35 on the downside.

JPM publishes earnings on Jan. 12 before the opening bell.

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