Oracle Corp. (ORCL)

Update 9/25/2017: ORCL gapped $2.14 to the downside after earnings were published, declining for four consecutive days before recovering a small amount of the loss. The expiration calendar dictated my exit on Monday for a loss.

Earnings came in about as expected, with a consensus forecast of 63 cents per share and reported earnings of 62 cents. Zacks analysis had forecast only a  -0.34% chance of a downside earnings surprise. The stock’s beta, at 1.05, ios equivalent to the S&P 500.

The first-day declined of $4.05 after earnings exited the expected move of $2.37 and the average post-earnings move over the past year of $4.33. In some, the price response was a true outlier.

Shares declined by 6.3% over 11 days, or a -209% annual rate. The options position produced a -37.9% loss for a -1,257% annual rate.

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ORCL publishes earnings on Thursday after the closing bell.

I shall use options that trade for the last time 15 days hence, on Sept. 29.

Implied volatility stands at 29%, which is 2.8 times the VIX, a measure of the volatility of the S&P 500 index.

ORCL’s IV stands at the peak of both its annual range and its most recent broad movement.

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9/14 – 2:55 p.m. New York time

Outcomes: I entered a position on ORCL timed to coincide with an earnings announcement.

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9/13 – 2:25 p.m. New York time

As anticipated, no trades today. My one positions remains a bullish vertical spread on SPY based on Elliott wave analysis, and it is proceeding as I had hoped.

By Tim Bovee, Portland, Oregon, Sept. 13, 2017

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9/12 – 3:05 P.M. New York time

Outcomes: No new positions and no exits.

I had posted last week that there were no actionable earnings announcements in sight for this week. That has changed. I shall be looking at ORCL on Thursday as a potential new position.

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SPDR S&P 500 ETF (SPY)

Update Oct. 25, 2017: SPY has completed its uptrend according to my Elliott wave count. I am closing this series and have opened a new series based on bear verticals, which may be read here.

The series began on Sept. 11, 2017, and I exited the final position on Oct. 6, for 25 days altogether. I was continually in the position throughout that period.

Shares rose by 1.6% over 25 days, or a +23% annual rate. The options position produced a +44.8% return for a +854% annual rate

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9/11 – 3:25 p.m. New York time

I made one trade today, entering a position on SPY based on Elliott wave theory. This week there are no earnings plays that qualify for further analysis, so I am looking elsewhere for trades.

It has been awhile since I have traded based on Elliott wave theory, although I use it all the time in deciding when I should exit. Elliott wave analysis tracks patterns in price movements. Here are some places to go for more information:

• StockCharts has a good explainer.
• The principal practioner of Elliott wave analysis is Robert Prechter at Elliott Wave International, which has much information freely available.
• His book, Elliott Wave Principle, is a must-read for people interested in this form of analysis.
• So is his company’s valuable pragmatic publication, Visual Guide to Elliott Wave Trading. 
• For any interested in the theoretical side of Elliott wave as applied to finance, Prechter’s The Socionomic Theory of Finance is the book to read.

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This is a week for a potpourri of data, including two price reports: The consumer price index on Thursday and the producer price-final demand index on Wednesday, each at 8:30 a.m. New York time.

Also out, on Friday, retail sales at 8:30 a.m. and industrial production a 9:15 a.m.

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9/8 – 3:15 p.m. New York time

One trade today: I exited KR for a profit. In terms of evaluating the analysis, the net step is to see what happens to the price on Monday. KR on the second trading day after the four previous earnings announcements showed large moves. I exited early and under target to avoid such a move. I’m interested to see if in fact a large Day 2 move happens for a fifth time.

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VeriFone Systems Inc. (PAY)

PAY publishes earnings on Thursday after the closing bell.

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

Implied volatility stands at 48%, which is 4.1 times the VIX, a measure of the volatility of the S&P 500 index.

PAY’s IV stands in the 62nd percentile of its annual range and at the peak percentile of its most recent broad movement.

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The Kroger Co. (KR)

Update 9/8/2017: KR came in 1 cent higher that the Street’s consensus earnings estimate, consistent with the small earnings surprise predictor score of 0.96 from Zacks Investment Research.

Shares fell $1.42 at the open, remaining within the profit zone and consistent with the low beta. In my preliminary analysis I noted that KR tended to see large moves on the second trading day after earnings were published. Rather than risk a loss, I exited at 14.7% of maximum potential profit, below my target of 25%.

The price move was within the bounds observed after the last four earnings announcements, including the $1.23 central tendency move, the narrowest of the metrics.

The price fall, despite the positive earnings surprise, coincided with Zacks’ negative view; the Zacks score is a bearish 4.

For the one-day holding period of my position, shares fell by 4.9%, or a -1,801% annual rate. Tye options position produced a 17.2% return for a +6,293% annual rate.

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KR publishes earnings on Friday before the opening bell.

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

Implied volatility stands at 45%, which is 3.8 times the VIX, a measure of the volatility of the S&P 500 index.

KR’s IV stands at the peak percentile of both its annual range and its most recent broad movement.

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