12/15 – 2:45 p.m. New York time
In today’s outcomes, I exited four earnings plays, three based on options — COST, JBL and ORCL — and one on COST using shares. All analyses have been updated with results. I entered no new positions.
ORCL Analysis
Oracle Corp. (ORCL)
Update 12/15/2017: ORCL’s earnings of $0.70 per share beat analysts’ consensus estimate of $0.69 by 1.1%. Shares dropped about $5 in after-hours trading, rising only slightly the next day after the opening bell. I exited for a loss.
Shares fell by 4.7% over my holding period of less than a day, or a -1,724% annual rate. The options position produced a 9.9% loss for a -3,622% annual rate.
As I entered the trade ORCL had a neutral (3) Zacks rank with an earnings surprise predictor (ESP) of -0.42%. Shares were showing a weak bull trend, with an average directional index (ADX) of 17.5 and a DI gap (+DI minus -DI) of 10.31. The ADX stood in the 11th percentile of its recent range.
ORCL’s fall from the pre-earns closing bell to the end of the first session of the announcement was $1.89, within the $2.33 average of the last four earnings announcements, the $3.33 central tendency and the $4.05 maximum.
The expected price move, with 85% accuracy, of $2.33 was eclipsed by a decline that, at its maximum, was down $3.19. The movement broke was close to being contained by the $3.14 profit zone to the downside, breaking below it by 5 cents.
ORCL publishes earnings on Thursday after the closing bell.
I shall use options that trade for the last time eight days hence, on Dec. 22.
Implied volatility stands at 29%, which is 2.9 times the VIX, a measure of the volatility of the S&P 500 index.
ORCL’s IV stands in the 96th percentile of its annual range and most recent broad movement.
JBL Analysis
Jabil Inc. (JBL)
Update 12/15/2017: JBL’s earnings of $0.80 per share came in 1.6% below the Street estimate of $0.81. Shares rose a dollar in after-hours trading after the announcement, stayed high overnight, and then a dollar in the 10 minutes before the opening bell and the first 10 minutes of the session. I exited soon after the open at 31.5% of maximum potential profit.
Shares rose by 1.7% during my holding period of less than a day, or a +637% annual rate. the options position produced a 46% return for a +16,790% annual rate.
Going into the trade Zacks gave JBL a neutral rank (3) with no expectation of an earnings surprise. The average directional index (ADX) stood at 17.4, with a directional index gap (+DI minus -DI) of -7.48, a bearish reversal. The ADX stood in the 45th percentile of its most recent broad movement.
JBL rose $0.42 from the pre-earns close to the end of the trading the first session after the announcement, stay well within the $1.54 average movement of the past four announcements, the central tendency of $1.24 and the maximum of $2.58.
The expected move of $1.55 contained JBL’s maximum rise of $1.13, which also stayed within the upside profit zone, $1.46.
JBL publishes earnings on Thursday after the closing bell.
I shall use options that trade for the last time eight days hence, on Dec. 22.
Implied volatility stands at 36%, which is 3.5 times the VIX, a measure of the volatility of the S&P 500 index.
JBL’s IV stands in the 78th percentile of its annual range and the 82nd percentile of its most recent broad movement.
COST Analysis
Costco Wholesale Corp. (COST)
Update 12/15/2017: COST’s earnings beat the Street estimate of $1.35 per share by 7.%, coming at $1.45. Shares rose in overnight trading by more than $10, then at the opening bell dropped off by about $2 and went into a sideways trend. I exited at 1.7% of maximum potential profit.
Shares rose by 3.6% during my holding period of less than a day, for a +1,316% annual rate. The options position produced a 1.7% return for a +624% annual rate.
Going into the trade COST had a neutral (3) rank from Zacks, with an earnings surprise predictor (ESP) of 1.39%. The shares uptrend was strong, with an average directional index (ADX) of 47.9, which is at the peak of the most recent broad movement. The DI gap between the directional indices (+DI, -DI) was 26.4.
From the pre-earns close to the end of the first trading day after the announcement, COST rose $6.20, slightly more than the average movement of $6.14. well below the maximum move of $9.98 and greater than the central tendency of $5.73.
The expected price move, with 85% accuracy, of $6.14 was eclipsed by the actual maximum move of $8.82 and broke free of the $6.55 upside profit zone.
Click here for the associated shares trade results.
COST publishes earnings on Thursday after the closing bell.
I shall use options that trade for the last time eight days hence, on Dec. 22.
Implied volatility stands at 24%, which is 2.4 times the VIX, a measure of the volatility of the S&P 500 index.
COST’s IV stands in the 93rd percentile of its annual range and the 89th percentile of its most recent broad movement.
Live: Thursday, Dec. 14, 2017
Live: Wednesday, Dec. 13, 2017
Shares: PAY
I have entered an earnings play on PAY using long shares as a vehicle.
Although PAY beat the Street consensus earnings estimate, the company provided forward outlook that resulted in a price decline immediately after the opening bell.
| sym | entry | exit | result ($) | result (%) | entry date | exit date |
| PAY | 18.53 | 17.39 | -1.14 | -6.2% | 12/12 | 12/13 |
| zacks rank | zacks esp | DI spread | ADX | earns est. | earns actual | |
| 3 | 0.58 | 6.13 | 34.74 | 0.43 | 0.44 |
By Tim Bovee, Portland, Oregon, Dec. 12, 2017
Live: Tuesday, Dec. 12, 2017
12/12 – 3 p.m. New York time
In today’s outcomes, I entered one new position, a shares position in PAY, and exited none.
Live: Monday, Dec. 11, 2017
12/11 – 3:10 p.m. New York time
As it turns out RMR is unsupported by Robinhood, the no-fee brokerage I use for earnings plays using shares. No, no trade, and that means no outcomes today.
The Week Ahead: Money decision, Yellen, prices, retail, industry, witches
The Federal Open Market Committee completes a two-day meeting on Wednesday with an announcement and forecasts at 2 p.m. New York time and a news conference with Fed Chair Janet Yellen at 2:30 p.m.
Yellen’s term ends Feb. 3, when she will be replaced by the present Fed Gov. Jerome Powell. The FOMC last raised its target federal funds rate on June 15, by 25 basis points to the $1.00 to $1.25 range. So far there have been four increases in the post-recession period, beginning Dec. 17, 2015 from the recession low of $0.00 to $0.25.
The morning before Wednesday’s FOMC announcement, the latest consumer price index numbers will be published at 8:30 a.m. Another set of price statistics, the producer price index final demand report, will be released on Tuesday at 8:30 a.m.
Two other high-visibility reports hit the Street’s consciousness during the week: Retail sales on Thursday at 8:30 a.m. and industrial production on Friday at 10:15 a.m.
Friday is a quadruple witching day in the markets, when stock options, stock market index futures and options, and single-stock futures all expire together, between 3 p.m. and 4 p.m.
Read More »
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