1/16 – 3:20 p.m. New York time
I exited an options position on JPM and shares positions on BMRC and FRC. I entered no positions
The Week Ahead: Short week, industry and housing
The U.S. markets will be closed on Monday for the Martin Luther King Jr. holiday. Markets in London, Tokyo and Sydney will be open as usual.
Two economic reports punctuate the week: Industrial production on Wednesday at 9:15 a.m. New York time and housing starts on Thursday at 8:30 a.m.
AXP Analysis
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.
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.
IBM Analysis
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.
Live: Friday, Jan. 12, 2018
HAL Analysis
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.
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 $50.73 on the downside. I skewed the long put strike downward to accommodate my view that a post-earns decline is more likely than a rise.
HAL publishes earnings on Jan. 22 before the opening bell.
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Shares: FFBC
I have entered an earnings play on FFBC using shares. The company will publish earnings on Jan. 18 after the closing bell.
The position has an uptrending Fisher Transform and a high chance of a positive earnings surprise, and as an added bonus, a very bullish Zacks rank.
FFBC, in common with the broad market, turned down on the 4-hour Fisher Transform. With earnings so close, I exited for a very small profit.
| sym | entry | exit | result ($) | 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
Live: Thursday, Jan. 11, 2018
Live: Wednesday, Jan. 10, 2018
Shares: BMRC
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
Tim Bovee, Private Trader 
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