Shares: RPM, WBA

Tim Bovee2 Comments

I have entered earnings plays on RPM and WBA using long shares.

For both the average directional index (ADX) is below 25, the transition from non-trending to trending, but the positive earnings surprise indexes (ESP) from Zacks is large enough to make the trades attractive.

I exited the next day. RPM beat its earnings estimates by a dime and the price rose. WBA failed by reach the estimates by two cents, and the price fell. Both at high ESP scores — RPM the highest — and WBA had the more bullish trend scores, with a higher ADX and a wider spread between the two directional index (+DI, -DI). The analysis failed in the case of WBA.

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WBA Analysis

Tim Bovee1 Comment

Walgreens Boots Alliance Inc. (WBA)

I have passed a short iron fly spread on WBA, using options that trade for the last time nine days hence, on Jan. 12.

The bid/ask spread, at 29.9%, is too wide for my taste. I prefer single digits. Another problem lies with the long call leg; the strike closest to my goal of delta 10 has a delta of 20. The next highest jumps down to delta 3.

The profit zone for this position is between $78.50 to the upside and $74 to the downside.

WBA publishes earnings on Thursday after the closing bell.

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MON Analysis

Tim Bovee1 Comment

Monsanto Co. (MON)

I have passed a short iron fly spread on MON, using options that trade for the last time nine days hence, on Jan. 12. The bid/ask spread, at 42.2%, is too wide to meet my standards.

The profit zone for this position is between $119.55 to the upside and $113.55 to the downside.

MON publishes earnings on Thursday after the closing bell.

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The Week Ahead: Jobs, trade, manufacturing and the FOMC minutes

Tim Bovee

Monday is New Year’s Day, and markets will be closed in New York, London, Tokyo and Sydney.

The monthly employment situation report will be published on Friday at 8:30 a.m. New York time, starting off the first week of 2018 with a high-impact report. Simultaneously, another major report, international trade, will also be released.

The employment reporting gets a sneak preview on Thursday at 8:15 a.m. with the private-sector ADP employment report.

One other top report will be out during the week: The Institute of Supply Management manufacturing survey on Monday at 10 a.m.

Also, the Federal Open Market Committee minutes of its Dec. 13 meeting will be released on Wednesday at 2 p.m. At that meeting the FOMC raised the target for the federal funds rate from 1.25% to 1.5%, continuing its gradual tightening as the economy recovers. Two members, Chicago Fed Pres. Charles Evans and Minneapolis Fed Pres. Neel Kashkari, dissented, preferring to keep the target unchanged.

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