10/25 – 3:20 p.m. New York time
Here are today’s outcomes. I entered an earnings play on MO and exited an unsuccessful one on WHR. I also ended my bullish trend series on SPY, posting results, and replaced it with a new bearish trend series. See the old series analysis here, and the new series analysis here.
AT&T Inc. (T)
Update 10/30/2017: T’s earnings came in at $0.74 per share, slightly below analysts’ $0.76 consensus. Shares gapped to the downside by 60 cents and then swung into a sideways movement that has so far continued for three days. I exited for a loss.
Zacks anticipated the downside surprise but at a larger magnitude, the algorithm of its Earnings Surprise Predictor giving the event. a -0.96 score.
The first post-announcement session closed down $1.37 from the pre-earnings close, 43 cents less than the maximum move of $1.81 over the past year and well above the central tendency of $0.47.
Shares declined by 2.4% over my six-day holding period, or a -143% annual rate. The options position produced a -33.6% loss for a -2,041% annual rate.
T publishes earnings on Tuesday after the closing bell.
I shall use options that trade for the last time 10 days hence, on Nov. 3.
Implied volatility stands at 24%, which is 2.2 times the VIX, a measure of the volatility of the S&P 500 index.
T’s IV stands in the 92nd percentile of its annual range and the 88th percentile of its most recent broad movement.
Norfolk Southern Corp. (NSC)
NSC publishes earnings on Wednesesday before the opening bell.
I shall use options that trade for the last time 10 days hence, on Nov. 3.
Implied volatility stands at 26%, which is 2.7 times the VIX, a measure of the volatility of the S&P 500 index.
NSC’s IV stands in the 54th percentile of its annual range and the 84th percentile of its most recent broad movement.
Whirlpool Corp. (WHR)
Update 10/15/2017: There were indications a downside earnings surprise was in the making, and WHR obliged, report $3.83 per share compared to the consensus estimate of $3.90. Shares declined by $19.25 the first trading day after publication.
For me it the outcome represented the chickens coming home to roost. I prefaced my decision to take the trade with this: “Despite the poor coverage…”. I bent my rules by entering a position whose zone of profit failed to cover both the expected move and the post-earns moves average, maximum and central tendency. The actual move exceed the maximum of the past four announcements by 88 cents.
My taking the trade points to an aspect of my psychology, and perhaps trader psychology in general, that I’ve noted over the years. If I put effort into analyzing a trade, I really want to make that trade, and I’m disappointed if I must pass on it. So the lesson for trading is, “Follow the numbers, not your heart.”
Shares declined by 11.24% over my two-day holding period, or a 2,052% annual rate. The options position produced a 40.6% loss for a 7,411% annual rate..
WHR publishes earnings on Monday after the closing bell.
I shall use options that trade for the last time 11 days hence, on Nov. 3.
Implied volatility stands at 32%, which is 3.1 times the VIX, a measure of the volatility of the S&P 500 index.
WHR’s IV stands in the 88th percentile of its annual range and the 96th percentile of its most recent broad movement.
General Motors Co. (GM)
Update 10/24/2017: GM’s earnings came in at $1.32 per share, beating the Street consensus of $1.19. The share price rose by about $2 from the close in overnight trading and retraced about half of the rise by the opening bell.
Zacks had given GM an earnings surprise prediction score of 3.14. The $1.42 price movement during the life of my position exceeded both the average and the central tendency of the past four post-earns moves.
Shares rose by 3.1% over my one-day holding period, or a +1,144% annual rate. The options position produced a +96.2% return for a +35,096% annual rate.
GM publishes earnings on Tuesday before the opening bell.
I shall use options that trade for the last time 25 days hence, on Nov. 17.
Implied volatility stands at 25%, which is 2.4 times the VIX, a measure of the volatility of the S&P 500 index.
GM’s IV stands in the 52nd percentile of its annual range and the 82nd percentile of its most recent broad movement.
The first look at gross domestic product for the 3rd quarter will be published on Friday at 8:30 a.m. New York time. This release, the advance estimate, will be followed by two additional revisions.
Appetite for big-ticket items will be quantified on Wednesday with the release of the durable goods orders report, and the report on international trade in goods will be out on Thursday, each at 8:30 a.m.
Also impacting the week: New home sales on Wednesday at 10 a.m. and the Purchasing Managers Institute composite flash release on Tuesday at 9:45 a.m.
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Halliburton Co. (HAL)
HAL publishes earnings on Monday before the opening bell.
I shall use options that trade for the last time 14 days hence, on Nov, 3.
Implied volatility stands at 26%, which is !0 times the VIX, a measure of the volatility of the S&P 500 index.
HAL’s IV stands in the 2tth percentile of its annual range and the 72nd percentile of its most recent broad movement.
Tim Bovee, Private Trader 
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