Micron Technology Inc. (MU)
Update 1/10/2017: MU gapped sharply to the upside after earnings were published and never returned to the position’s profit zone.
Shares rose 9.5% over 20 days, or a +173% annual rate. The options position produced a 24.7% loss on debit for a -451% annual rate.
MU publishes earnings on Wednesday after the closing bell.
I’ve opened up space in my account by exiting TLT to accommodate an additional position. I’ll analyze today’s prospect, MU, as a potential earnings play and update the TLT analysis with results within an hour.
By Tim Bovee, Portland, Oregon, Dec. 21, 2016
I’m looking at one prospect for Wednesday, an earnings play on MU. One difficulty is that my funds are entirely committed, so I’ll be unable to enter any new positions unless I exit a position.
By Tim Bovee, Portland, Oregon, Dec. 20, 2016
I entered a position on NKE timed to coincide with an earnings announcement.
By Tim Bovee, Portland, Oregon, Dec. 20, 2016
NIKE Inc. (NKE)
NKE publishes earnings on Tuesday after the closing bell.
Update 12/27/2016: NKE rose sharply after earnings were published and then worked its way back down toward the strike price and back into profitable territory, allowing me to exit today at 26.6% of maximum profit.
Shares declined by 2% over seven days, or a -48% annual rate. The options position produced a 25.2% yield on debit for a +1,312% annual rate.
The distributions of implied volatility across the options grids of four of the prospects I identified after the closing bell yesterday — FINL, FDX, ACN and PAYX — are a bit spotty, which leads me to a negative assessment of their liquidity.
NKE remains a prospect, and I shall post a full analysis later today.
By Tim Bovee, Portland, Oregon, Dec. 20, 2016
I’ll be looking at up to five earnings plays on Tuesday. No volatility plays unrelated to earnings announcements passed my initial analysis.
I entered a position on GIS timed to coincide with earnings.
I exited an earnings play on ADBE for a profit.
I considered entering earnings plays on DRI, KMX and CCL, but their options grids wouldn’t allow me to construct a risk/reward ratio to my liking. I prefer that the ratio be close to even for such iron fly positions. All were skewed by quite a bit more.
By Tim Bovee, Portland, Oregon, Dec. 19, 2016
General Mills Inc. (GIS)
GIS publishes earnings on Tuesday before the opening bell.
Update 12/27/2016: GIS dropped after earnings were published but recovered to near the strike price within a few days. I exited at 25% of maximum profit, my standard goal for positions of this sort.
Shares declined by 1.2% over eight days, or a -56% annual rate. The options position produced a 29.34% yield on debit for a +1,339% annual rate.
I have four earnings prospects on my desk this morning, and I have room in my holdings for two of them.
GIS has the best implied volatility profile of the batch, so I’ll analyze it first. DRI and KMX are similar in their relative volatilities; I’ll try DRI first, with KMX as a fallback.
CCL is fairly low in the annual percentile, at the 40th, and so I shall analyze it as a last resort.
By Tim Bovee, Portland, Oregon, Dec. 19, 2016
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