11/14 – 3:50 p.m. New Yor time
I entered two positions today, both of them earnings plays using shares as a vehicle: AUPH and MTOR. I exited an options-based earnings play on HD.
HD Analysis
The Home Depot Inc. (HD)
Update 11/14/2017: HD’s earnings did slightly better than analysts expected, coming in at $1.8354, compared to the forecast of $1.81. The price opened down $1.71 at the opening bell after the announcement. I exited for a loss.
The Zacks earnings surprise predictor algorithm, at 0.57, suggested that there would be an earnings surprise, in the context of a bullish score (2) and a beta of 1.08.
The share price rose by $2.71 from the pre-earns closing bell to the first close after earnings were published, 13 cents more than the average move of the four prior quarters and 6 cents beyond the central tendency.
Shares declined by 1.4% over my one-day holding period, or a -614% annual rate. The options position produced a -21.2% loss for a -7,718% annual rate.
HD publishes earnings on Tuesday before the opening bell.
I shall use options that trade for the last time 32 days hence, on Dec. 15.
Implied volatility stands at 22%, which is double the VIX, a measure of the volatility of the S&P 500 index.
HD’s IV stands in the 71st percentile of its annual range and the 86th percentile of its most recent broad movement.
Live: Monday, November 13, 2017
11/13 – 2:55 p.m. New York time
HD analysis posted.
11/13 – 2:40 p.m. New York time
I have updated JD with results.
11/13 – 9:50 a.m. New York time
I have exited JD for a profit and shall update the analysis with results later in the day/
HD’s earnings surprise score remains a bit lower than I like, but high enough to trade using options if I’m of a mind. The bid/ask spread on a directional bull trade is sufficiently low to meet my standards. The non-directional spread is overly high and so is off the table unless it improves.
None of the potential earnings plays using shares — DKS, ICON, MTSC, NCSM, SBBP, SSYS and VRS — meets my standards, on two grounds: I require that the Zacks score be neutral or bullish (3 or greater) and that the earnings surprise predictor be positive (>0). Only HD meets that standard, and since it qualifies for an options trade, its off the table for shares.
i anticipate no new data from Zacks prior to the closing bell, so the shares prospects are off the table.
The Week Ahead: Prices, retail, industry, housing
Two price reports are on the economic reporting agenda this week: The consumer price index on Wednesday and the producer price index for final demand on Tuesday, each at 8:30 a.m. New York time.
Several portions of the economic pie will also come under scrutiny. Retail sales for October, out Wednesday at 8:30 a.m., will provide a baseline for the holiday shopping season. The factories that those presents and much more will show up in the industrial production on Thursday at 9:15 a.m., and the ever influential business of providing roofs over people’s heads, housing starts, will be published on Friday at 8:30 a.m.
Fed Gov. Lael Brainard talks about fintech — the financial technology that is remaking our economy — at the Financial Stability Conference in Ann Arbor, Michigan, on Thursday at 3:45 p.m. New York time. The even will be livestreamed here.
TSN Analysis
Tyson Foods Inc. (TSN)
TSN publishes earnings on Monday before the opening bell.
I shall use options that trade for the last time 14 days hence, on Nov. 24.
Implied volatility stands at 32%, which is triple the VIX, a measure of the volatility of the S&P 500 index.
TSN’s IV stands in the 74th percentile of its annual range and the 96th percentile of its most recent broad movement.
JD Analysis
JD.com Inc. (JD)
Update 11/13/2017: JD reported earnings of $0.1192 per share, beating the Street estimate of $0.10. The share price rose by more than $4 before the opening bell but dropped back by the start of general trading.
Zacks had forecast no earnings surprise in the context of a neutral score (3) and a 1.40 beta.
JD shares closed $1.38 higher the first trading day after earnings were published compared to the final pre-earnings close. That puts the move within the expected 85% chance move of $2.82 and all three post-earns moves metrics of the past year: the average of $1.85, the maximum of $2.77 and the central tendency of $2.18.
During the lifespan of my position, shares rose by 1.4% over three days (including the weekend), or a +174% annual rate. The options position produced a +33.0% return for a +4,019% annual rate.
JD publishes earnings on Monday before the opening bell.
I shall use options that trade for the last time 14 days hence, on Nov. 24.
Implied volatility stands at 45%, which is 4.1 times the VIX, a measure of the volatility of the S&P 500 index.
JD’s IV stands in the 56th percentile of its annual range and the 87th percentile of its most recent broad movement.
Live: Friday, November 10, 2017
11/10 – 3:15 p.m. New York time
Outcomes: I entered an earnings play using options on JD but passed on a similar play on TSN after analysis. I exited three earnings plays using shares: CLMT, ESES and PBYI.
Shares: PBYI, CLMT, ESES
Shares trades in connection with earnings announcements: PBYI, CLMT and ESES.
Outcomes: The CLMT announcement did not happen, as the company released a statement. PBYI’s earnings came in higher than estimated, although still a loss, and ESES came in below the estimate, also still negative. All three positions produced losses.
| sym | entry | exit | result ($) | result (%) | entry date | exit date |
| PBYI | 127.50 | 112.45 | -15.05 | -11.8% | 11/9 | 11/10 |
| zacks score | zacks esp | beta | earns est. | earns actual | ||
| 3 | 18.47 | 0.85 | -2.75 | -1.36 | ||
| sym | entry | exit | result ($) | result (%) | entry date | exit date |
| CLMT | 9.80 | 9.30 | -0.50 | -5.1% | 11/9 | 11/10 |
| zacks score | zacks esp | beta | earns est. | earns actual | ||
| 3 | 80.95 | 1.26 | 0.16 | TBD | ||
| sym | entry | exit | result ($) | result (%) | entry date | exit date |
| ESES | 1.51 | 1.46 | -0.05 | -3.3% | 11/9 | 11/10 |
| zacks score | zacks esp | beta | earns est. | earns actual | ||
| 3 | 16.67 | 2.14 | -0.06 | -0.1 |
NVDA Analysis
NVIDIA Corp. (NVDA)
NVDA publishes earnings on Thursday after the closing bell.
I shall use options that trade for the last time eight days hence, on Nov. 17.
Implied volatility stands at 51%, which is 4.6 times the VIX, a measure of the volatility of the S&P 500 index.
NVDA’s IV stands in the 64th percentile of its annual range and at the peak of its most recent broad movement.
Live: Thursday, November 9, 2017
11/9 – 3:15 p.m. New York time
I entered three earnings plays using shares — CLMT, ESES and PBYI — and exited one, ANDV, for a loss. I analyzed NVDA but declined to take the trade, reflecting upon the virtue of trading small.
Tim Bovee, Private Trader 
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