I have four potential earnings plays on my desk for Monday: BABA, DD, LMT and VZ. However, my short list is LMT and VZ. That requires some explanation.

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I entered a position on MCD timed to coincide with an earnings announcements, and exited positions on AXP, BAC and WBA after they hit my profit points.

By Tim Bovee, Portland, Oregon, Jan. 20, 2017

 

McDonald’s Corp. (MCD)

Upate 2/24/2017:  MCD rose almost continually after earnings were published. I exited for a loss to avoid potential assignment on ex-dividend day.

Shares rose by 4.7% over 35 days, or a 49% annual rate. The options positon produced a 24.32% loss on debit for a =254% annual rate.

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MCD publishes earnings on Monday before the opening bell

I shall use the MAR series of options, which trades for the last time 56 days hence, on March 17.

Implied volatility stands at 19%, which is 1.6 times the VIX, a measure of the volatility of the S&P 500 index.

MCD’s IV stands in the 33rd percentile of its annual range and the 69th percentile of its most recent broad movement.

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I shall analyze MCD for an earnings play.

I’ve exited WBA for a profit and shall post results later today.

I am attempting an exit of AXP but have yet to be filled.

By Tim Bovee, Portland, Oregon, Jan. 20, 2017

 

I shall be looking at MCD on Friday as a potential earnings play.

By Tim Bovee, Portland, Oregon, Jan. 19, 2017

 

I entered positions on AXP and IBM as earnings plays.

By Tim Bovee, Portland, Oregon, Jan. 19, 2017

American Express Co. (AXP)

Update 1/20/2017: AXP shares declined after coming in under the Street estimate of earnings per shares by 7%. Implied volatility also dropped sharply, moving my position to my profit point, which is 25% of maximum potential profit.

Shares declined by 0.9% over one day, or a -325% annual rate. The options position produced a 33.2% yield on debit for a +760% annual rate.

AXP publishes earnings today after the closing  bell.

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International Business Machines Corp. (IBM)

Update 2/7/2017: IBM goes ex-dividend on Feb. 8 and I exited for a loss to avoid the chance of assignment. The share price rose sharply after earnings were published, pushing the price beyond the profitable zone for my iron fly options spreads.

Shares rose by 7.1% over 19 days, or a +136% annual rate. The options position produced a 27.1% loss on debit for a -520% annual rate.

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IBM publishes earnings today after the closing bell.

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I shall be analyzing AXP and IBM for trades timed to coincide with earnings announcements.

GE, which was on the Prospects list, continues to have overly low implied volatility, at the 11th percentile of its annual range and the 15th percentile of its most recent broad movement, and I shall give it no further consideration.

By Tim Bovee, Portland, Oregon, Jan. 19, 2017

 

I have three prospective earnings play on my desk for Thursday: AXP, GE and IBM.

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