The Kroger Co. (KR)

Update 11/30/2017: KR announced earnings of $0.4139 per share, beating analysts’ consensus expectation of $0.40. Share prices rose by $3.29 in early trading before the opening bell and then at the open went into a decline that lasted the day. I exited early, near the peak., at 86.1% of maximum potential return.

Shares rose by 11.8% during the one-day lifespan of the position, or a +4,301% annual rate. The options position produced a +620.0% return (not a typo) for a +226,300 annual rate (also not a typo).

From the pre-earns close to the close of the first post-earns session, the price rose by $1.48, well within the post-earns moves of the last four quarters.

Eleven analyst forecasts had implied a positive earnings surprise, with a Zacks earnings surprise predictor score of 3.33 in the context of a neutral longer-range rank of 3.

The trend metrics were mildly bullish, with an average directional index (ADX) of 25.88, a +DI of 32.38 and a -DI of 12.43.

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KR publishes earnings on Thursday before the opening bell.

I shall use options that trade for the last time 16 days hence, on Dec. 15.

Implied volatility stands at 41%, which is 3.8 times the VIX, a measure of the volatility of the S&P 500 index.

KR’s IV stands in the 75th percentile of its annual range and the 92nd percentile of its most recent broad movement.

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11/29 – 3:10 p.m. New York time

I entered an options position on KR and shares positions on DSGX and MIK. I exited a shares position on PSTG.

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Corrected from an earlier version posted 11/29.

Shares trade in connection with an earnings announcement for action on November 28: GLNG and PSTG.

GLNG the earnings publication date changed from what was expected and I exited for a small profit. Earnings were published after I exited, coming in slightly worse than the estimate, and the stock began a downtrend.

PSTG came in better than the Street estimate, although it was still a loss, and the price began a decline.

sym	entry	exit	result ($)	result (%)	entry date	exit date
GLNG	25.01	25.16	0.15	0.6%	11/28	11/29
	zacks rank	zacks esp	earns est.	earns actual
	4	7.97	-0.36	-0.3673
sym	entry	exit	result ($)	result (%)	entry date	exit date
PSTG	18.90	17.93	-0.97	-5.1%	11/28	11/30
	zacks rank	zacks esp	earns est.	earns actual
	3	18.52	-0.03	-0.0276

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Marvell Technology Group Ltd. (MRVL)

MRVL publishes earnings on Tuesday after the closing bell.

I shall use options that trade for the last time 10 days hence, on Dec. 8.

Implied volatility stands at 38%, which is 3.8 times the VIX, a measure of the volatility of the S&P 500 index.

MRVL’s IV stands in the 71st percentile of its annual range and the 81st percentile of its most recent broad movement.

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Autodesk Inc. (ADSK)

Update 11/30/2017: ADSK published earnings of a $0.12 per share loss, well below the Street estimate of a $0.1003 loss. In after hours trading share prices immediate drop $20 in 5 minutes. I exited for a loss.

Shares declined by 13.7% over the two-day existence of the position, or a -2,504% annual rate. The options position produced a -72.2% loss for a -13,181% annual rate.

The 12 analysts watching ADSK had anticipated a positive earnings surprise, issuing assessments implying an earnings surprise predictor score of 4.23 in the context of a neutral (3) longer-term expectation.

The $20.61 movement from the pre-earnings close to the end of the first post-earns session was larger than any among the prior four quarterly announcements.

The trend metrics showed ADSK as uptrending, with an ADSK of 30.79 with a +DI of 26.75 and a -DI of 15.00.

All in all, ADSK defied all metrics and every expectation.

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ADSK publishes earnings on Tuesday after the closing bell.

I shall use options that trade for the last time 17 days hence, on Dec. 15.

Implied volatility stands at 40%, which is 3.9 times the VIX, a measure of the volatility of the S&P 500 index.

ADSK’s IV stands in the 64th percentile of its annual range and the 84th percentile of its most recent broad movement.

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11/28 – 3:25 p.m. New York time

I entered an options position on ADSK and shares positions on GLNG and PSTG timed to coincide with earnings announcements. I analyzed MRVL as an options-based earnings play but declined to take the trade.

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Most of my trades coincide with publication of earnings, “earnings plays”, in the jargon of traders. I do so because those quarterly announcements are the only time I can guarantee heightened interest in stocks and their options, and therefore a likelihood that something will happen to provide me with an opportunity for profit. There is nothing worse than entering a position and seeing it immediately drift into the doldrums, where time passes and nothing happens.

Over years of trading I have settled on a few vehicles that best serve my needs.

When trading options, I use the short iron fly when I don’t know which way the price will move, or sometimes an iron condor if the options grid makes for a more balanced structure. When I expect the stock price to move in a direction, up or down, I use a short vertical position, a bull put spread for a rising price or a bear call spread for a falling one.

In analyzing potential positions I’m attempting to answer several questions.

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11/27 – 2:45 p.m. New York time

Outcomes: No new positions and no exits.

11/27 – 2:25 p.m. New York time

I have posted an essay: How I analyze trades. It is a detailed description of the steps I go through to select my trades.

11/27 – 1:05 p.m. New York time

I’m using this slow day to play catch-up with the post-earnings moves analyses. I have updated CSCO and HD.

11/27 – 9:35 a.m. New York time

GSM, MTSC and TECD have seen no change in their Zacks metrics and do not meet my standards for trading as earnings plays. I have no analyses and perhaps trades on my agenda for today.

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The Senate begins its nomination hearing for President Trump’s nominee to replace Janet Yellen as Federal Reserve chair, Fed Gov. Jerome Powell, The hearing will be held by the Committee on Banking, Housing and Urban Affairs, chaired by Sen. Michael Crapo, D-Idaho, on Tuesday at 9:45 a.m. New York time.

The outgoing Fed Chair Yellen delivers economic outlook testimony to the Joint Economic Committee of Congress on Wednesday at 10 a.m.

Five major reports will be published during the week: The second release of 3rd quarter gross domestic produce on Wednesday, international trade in goods on Tuesday and personal income and outlays on Thursday, each at 8:30 a.m., and new home sales on Monday and the Institute of Supply Management manufacturing index on Friday, each at 10 a.m.

One other potentially important Fed appearance during the week: The new Fed Vice Chairman for bank supervision addresses the Financial Stability and Fintech Conference on Thursday at 12:30 p.m. in Washington, D.C. His speech will be streamed live here.
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11/24 – 3:15 p.m. New York time

Outcomes: I’ve posted no analyses and placed no trades today.

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