Dollar General Corp. (DG)

Update 12/7/2017: DG’s earnings came in 1.1% below below expectations. The share price rose about $6 in overnight trading and then sank over hours back to where it had ended the prior today, before working its way up a bit until the closing bell. I exited early, during the most robust minutes of the fall, for a debit of $4.03, with shares at $93.77, for 14.3% of maximum potential profit.

The earnings announced were at odds with the Zacks earnings surprise predictor (ESP) algorithm that produced a positive score of 0.89 within the context of a bullish rank (2).

Shares rose by 3.% over my holding period of less than a day, or a +1,125% annual rate. The options position produced a 16.6% return for a +6,068% annual rate.

From the pre-earnings close to the post-earnings close, shares showed a net rise of $2.52, well within both the 85% confidence expected move of $6.43 and the profit zone of $4.50.

The trend metrics pointed toward a rising trend, with a positive directional index (+DI) of  37.2, a negative (-DI) of 12.3, and an average directional index (ADX) of 35.5.

The net move for the day was within the ranges of the last four post-earns moves, which averaged $3.30 with a maximum of $4.80 and a central tendency of $4.01.

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DG publishes earnings on Thursday before  the opening bell.

I shall use options that trade for the last time nine days hence, on Dec. 15.

Implied volatility stands at 32%, which is 2.9 times the VIX, a measure of the volatility of the S&P 500 index.

DG’s IV stands in the 59th percentile of both its annual range and tits most recent broad movement.

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Broadcom Ltd. (AVGO)

Update 12/7/2017: AVGO beat the Street’s expectations by 2.2%.The price rose by nearly $20 in overnight trading but then fell during the day and eventually returned to its starting point. I exited early for a debit of $7.33, with shares at $2679.75, for 13.9% of maximum potential profit.

Zacks had anticipated a small earnings surprise, with an earnings surprise predictor (ESP) score of 0.45 in the context of a bullish rank (2).

The ephemeral upward move post-announcement was in line with the ambiguities of the trend, with a positive direction index (+DI) of 29.2, a negative (-DI) of 16.0 and a weak trend signified by an average directional index (ADX) of 18.4.

Shares rose by 3.3% over the position’s lifespan of less than a day, or a +1,203% annual rate. The options position produced a 16.0% return for a +5,826% annual rate.

The expected move with an 85% accuracy was $13.64, with a $10 profit zone. In actuality the stock closed the first trading day after earnings were published at precisely the same price as it had closed before the announcement.

The overnight swing exceeded post-earnings moves of the past year, which showed an average of $9.98, a maximum of $19.94 and a central tendency of $4.01. The close to close difference, of course, was well within those past ranges.

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AVGO publishes earnings on Wednesday after the closing bell.

I shall use options that trade for the last time nine days hence, on Dec. 15.

Implied volatility stands at 38%, which is 3.4 times the VIX, a measure of the volatility of the S&P 500 index.

AVGO’s IV stands in the 81st percentile of its annual range and the 73rd percentile of its most recent broad movement.

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12/6 – 3:45 p.m. New York time

I have entered three new positions, AVGO , DG and LULU. I exited TLT as part of a roll forward in a series.

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12/5 – 3:20 p.m. New York time

In outcomes, I exited GIII.

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Shares trade in connection with an earnings announcement for action on Dec. 1: GIII.

Share prices rose after GIII hit the Street’s earnings expectations, from a pre-earns close of $30.11 to a post-earns peak of $35.03.

sym	entry	exit	result ($)	result (%)	entry date	exit date
GIII	30.39	33.71	3.32	10.9%	12/4	12/5
	zacks rank	zacks esp	earns est.	earns actual
	3	2.48	1.54	1.5384

By Tim Bovee, Portland, Oregon, Dec. 4, 2017

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12/4 – 3:20 p.m. New York time

Today’s outcomes: I entered one position, GIII, and exited another, GWPH. Both are earnings plays using shares.

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The monthly employment situation report will be published Friday at 8:30 a.m.,  with the privately published ADP employment report on Wednesday at 8:15 a.m. providing a glimpse of what is likely to come from the government report.

International trade statistics will be published on Tuesday at 8:30 a.m.
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Shares trade in connection with an earnings announcement for action on Dec. 1: GWPH

The share price gapped higher at the open, peaking at $129.01 in the second minute of trading. It then began to fall. reaching $125.38 in the 15th minute after the opening bell. I got out quickly after the fall began.

sym	entry	exit	result ($)	result (%)	entry date	exit date
GWPH	123.20	128.00	4.80	3.9%	12/1	12/4
	zacks rank	zacks esp	earns est.	earns actual
	3	19.71	-1.73	-0.18

By Tim Bovee, Portland, Oregon, Dec. 1, 2017

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12/1 – 3:05 p.m. New York time

In today’s outcomes, I entered a position on GWPH and exited one on FIVE, each of them an earnings play using shares.

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Shares trade in connection with an earnings announcement for action on November 30: FIVE

The company came in short of the Street estimate by more than a cent. The price rose overnight, I exited immediately after the opening bell, and then the price fell.

sym	entry	exit	result ($)	result (%)	entry date	exit date
FIVE	61.95	62.67	0.72	1.2%	11/30	12/1
	zacks rank	zacks esp	earns est.	earns actual
	2	5.56	0.13	0.1178

By Tim Bovee, Portland, Oregon, November 30, 2017

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