The Progressive Corp. (PGR)

I have entered an earnings play on PGR using shares. The company publishes earnings on Jan. 24 before the opening bell, and I must exit by Tuesday, Jan. 23 if I am to avoid holding through the earnings announcement.

I exited for a profit a day before earnings. Shares rose by 1.9% over five days for a +138% annual rate.

sym	entry	exit	result ($)	result (%)	entry date	exit date
PGR	57.02	58.10	1.08	1.89%	1/18
	zacks rank	zacks esp	FisherTrans	FT cross	earns est.	earns actual
	1	0.52	1.09	1/12/2018	0.77	TBD

By Tim Bovee, Portland, Oregon, Jan. 18, 2018

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1/18 – 1:45 p.m. New York time

I’ve entered a bull put spread on LVS

1/18 – 11:30 a.m. New York time

With the advent of earnings season, I have many prospects to work with, especially those using options, which can be traded using a bull, bear or neutral strategy. Shares plays, by contrast, can only be bullish under the restrictions imposed by the no-fee brokerage Robinhood.

I had one potential earnings play using shares remaining after this morning’s analysis, and I have taken the trade, entering a bull position on PGR. The other shares possibility of Wednesday, ETH, turned down and so is no longer a prospect.

I eight potential earnings plays using options, and my goal is to trade one of them.  My first focus will first be on the four whose metrics point toward a directional trade, using a vertical spread. They are LVS and TXN to the bull side and CMCSA and F to the bear side.

If none of those proves satisfactory, I shall next turn to the four whose metrics favor a directional neutral strategy, such as an iron fly or iron condor. They are ITW and PG, which are trending upward, and ABT and NSC, which are trending downward.

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1/17 – 2:05 p.m. New York time

With no trades in sight today, I am posting the outcomes early and moving on to other things.

I exited two options positions, AXP and HAL, and two shares positions, FFBC and PLXS. I began analysis of PG as a potential earnings play using options but cut it short when I learned that Jan. 18 — Thursday  — is ex-dividend day. I shall resume the analysis then.

I have updated the analyses of all exits with results.

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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

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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.

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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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