Posts Tagged ‘Earnings’
We talked about “Expiration Week Earnings Plays” in this week’s webinar (you can access an archived version from this link or peruse our webinar archive page). During the session, we highlighted what the option market was projecting about the expected move in companies such as JPMorgan Chase (JPM) and Google (GOOG).
At the time of the webinar (after Tuesday’s close), at-the-money straddles were indicating a 3.2% move in JPM and a 4.4% move in Google through today’s expiration. Remember a straddle is the simultaneous purchase (or sale) of the call and put with the same strikes (and same expiration). Adding the at-the-money call and put prices together is a reasonable reflection of the option market’s expected move for the underlying through the next expiration date at any given time. (more…)
Tags: Earnings, GOOG, Google, Long Straddle, Options Strategies, options trading, short straddle
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Thursday, October 14th, 2010
General Electric (NYSE:GE) reports earnings tomorrow before the open. GE has been a leader in the recent rally and has been a major influence on the price of the Dow Jones Industrial Average (DJIA) to the upside along with Caterpillar (NYSE:CAT). GE does not tend to be a volatile stock when compared to its Dow Jones peers. Even though GE is not an extremely volatile stock (relatively speaking) earnings reports can spur abnormal volatility.
Fundamental Analysis
GE obviously has its hands in many different pies spanning across several industries. This can make the shares hard to value, as can the sheer enormity and complexity of the company itself. (more…)
Tags: Earnings, GE, General Electric, Risk Reversal, Synthetic Stock
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Monday, August 16th, 2010
Before weekly options expanded to include weeklys on individual equities, it was rare for options expiration and corporate earnings reports to fall during the same week. One week, at-the-money (ATM) options have very little time value, obviously, large gamma, and negative theta. With such little time to go to expiration, the options market can provide a clear signal as to what it is predicting for the magnitude of stock returns around earnings events. This week of August expiration also includes earnings concentrated in the tech and retail sectors.
In the technology space, Network Appliance (NASDAQ:NTAP), Marvell Technology (NASDAQ:MRVL), Hewlett-Packard (NYSE:HPQ), and Dell Computer (NASDAQ:DELL) all report throughout the week.
Retailers TJX Cos. (NYSE:TJX), Abercrombie & Fitch (NYSE:ANF), Wal-Mart Stores (NYSE:WMT), and Home Depot (NYSE:HD) are all on Tuesday, with Target (NYSE:TGT) and Sears Holdings (NASDAQ:SHLD) following later in the week.
It is relatively clean to be able to look at the ATM long straddles (the simultaneous purchase of the same-strike call and put) and predict what degree of movement is expected. Remember the straddle doesn’t predict direction, only degree of the anticipated move.
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Tags: dell, Dell Computer, Earnings, Hewlett-Packard, HPQ, implied volatility, Long Straddle
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Boeing (NYSE:BA) is seeing some bullish attention this week surrounding its second-quarter earnings report. Wednesday ahead of the open, the aerospace name said second-quarter earnings came in at $1.06 per share, a nickel better than the consensus view. Revenue fell short of the mark, however. Nevertheless, Jim Cramer told his Mad Money audience that he likes the stock in the long term, particularly if it tests the $65-$66 region.
Thursday morning, Societe Generale offered its insight, upgrading Boeing from “sell” to “hold”. Interestingly enough, the firm maintains a 12-month price target of $65, which actually allows for a bit of downside in the next year. Whether you are a Boeing bull yourself or think the stock could stay range-bound, we’ve outlined a couple of option strategies below as examples of how varying outlooks can be represented by options. Remember that these are not buy/sell/hold recommendations. The prices are taken Thursday afternoon, when the stock was trading at $67.45, up 13 cents on the day.
Tags: BA, Boeing, Bull Call Spread, Earnings, Iron Condor, Option Strategies
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Thursday, July 22nd, 2010
Over the last few years, it was almost taken for granted that Goldman Sachs (NYSE:GS) was the cream of the crop when it came to investment banks. Well, after its respective earnings announcements this past week, Morgan Stanley (NYSE:MS) outdid its rival. There are headlines going around like, “Morgan Stanley Outshines Goldman Sachs in Trading.” The one place this was apparent was in equity trading where Goldman Sachs had net revenue of $235 million compared to $1.4 billion for Morgan Stanley. Morgan Stanley also seemed to outperform in investment banking.
In my opinion, one quarter does not mean Morgan Stanley has overtaken Goldman Sachs as the best investment bank in the world. GS still has a market cap that far exceeds it. However, it does beg the question, “Which one is the better investment over the next year?” There are some points that are in Morgan Stanley’s favor.
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Tags: Earnings, Goldman Sachs, GS, morgan stanley, MS, price-to-earnings
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While Google (NASDAQ:GOOG) is not exactly known for a complete lack of volatility around earnings, its movements have not been all that violent (on a percentage basis). Thursday’s earnings report may be a pivotal one for Google, with the smartphone wars continuing to heat up.
The Blackberry, part of the Research in Motion (NASDAQ:RIMM) family, still leads the sector with a 41% market share in the U.S. and of course the iPhone craze powers on, but Google’s Android operating system is still growing at an exponential rate. I like to think of it as the 1980s Microsoft (NASDAQ:MSFT)/Apple (NASDAQ:AAPL) saga, redux. Back then, MSFT, like Google, offered its “window” operating system to multiple computer makers. In doing so, the company got folks across the world and on different hardware platforms addicted to its products.
Apple, in typical Jobs’ style, only sold its operating system software (and all software, for that matter) for Apple-made PCs. This strategy hurt Apple in the early days. Obviously, things have improved for the company and now the iPhone is like the Rubik’s Cube of the 2000s. Apple has done a good job at getting the public addicted to a cool (albeit flawed) product. Now that Consumer Reports won’t bless the iPhone 4 because of antenna issues, I’m looking forward to seeing how Apple spins it. (more…)
Tags: AAPL, Apple, Bear Call Spread, Bull Put Spread, Earnings, GOOG, Google, iPhone, Options Strategies
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Buy, sell, hold?
The days of reckoning are upon us! So earnings season officially kicks off today with Alcoa’s (NYSE:AA) report. CSX Corporation (NYSE:CSX) and Novellus Systems (NASDAQ:NVLS) are on today’s schedule as well. As I write this at 6:00 a.m. Monday morning, futures in the S&P, DJX and Nasdaq are lower after a week’s worth of gains.
I wanted to take a couple of quick minutes today to highlight some things to remember and consider during earnings season as you make your decisions to buy, sell or hold. These things are also important to remember if you plan on employing an options strategy. Some high-profile companies that are scheduled to report this week are:
- INTC, YUM and FAST on Tuesday
- MAR on Wednesday
- AMD, JPM and GOOG on Thursday
- BAC, GCI, C and GE on Friday
There are many others reporting; the above issues are simply some of the more heavily followed. If you are wondering when a company of interest reports earnings, check out the OptionsHouse Research tab to locate the next earnings date under the “Events Calendar.” If none is posted, go to the company’s website, as some corporations may announce changes close to its report date or wait to disclose their exact earnings date.
Now that you know the relevant earnings date for your stocks, here are some factors to examine when deciding how to proceed:
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Tags: AA, AMD, BAC, buy sell hold, C, CSX, DJX, Earnings, fast, GCI, GE, GOOG, INTC, JPM, mar, NVLS, SPX, YUM
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Monsanto (NYSE:MON) is always one of my favorite stocks to watch, and I enjoy listening to their earnings conference call even more. Earnings are expected to be announced on June 30. With 15 analysts covering MON, the consensus per-share estimate is $0.80, and the high and low estimates are $0.85 and $0.75, respectively.
Monsanto is a world leader in specialized seed production and was the creator of the glyphosate based herbicide Roundup. This product used to be a rose but appears to have become a thorn in MON’s side, losing market share to cheaper Chinese versions since its patent protection expired. The good news is that the Supreme Court recently lifted a ban on Monsanto’s Genetically Modified Roundup-Resistant Alfalfa seed. The company also announced a three-year, $1 billion share buyback effective July 1, 2010. MON also declared a quarterly dividend of 26.5 cents per share on its common stock. The dividend is payable on July 30, 2010, to shareowners of record on July 9, 2010.
On June 9, MON said they are “working on a revitalized product strategy to bring more choices to farmer customers, offering them the premium opportunity the company’s products create.” With this, they projected mid-teens earnings growth beyond this fiscal year. I’m curious to hear more details on their strategy. (more…)
Tags: Earnings, Historical Volatility, implied volatility, MON, Monsanto, options trading, Ratio Put Spread
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Sometimes, as traders, we have to work with what we have and that’s not always a bad thing. What we currently “have” as of Monday morning is the knowledge of how Lowe’s Corp. (NYSE: LOW) performed in the last quarter, which can help us theorize the likely performance of a close peer, Home Depot (NYSE: HD).
Part of Lowe’s strategy has been to open their stores extremely close to existing Home Depot Stores. Not to mention that both stores are fairly similar in layout and selection (although each has their own unique brands). This has not only made the pair of retailers close rivals, but also similar in their sensitivity to consumer spending in the sector.
Today, Lowe’s reported strong first-quarter results, posting earnings of 34 cents a share, which were higher than consensus estimates of about 30 cents. The home improvement giant noted favorable weather, strong appliance sales, and increased shopper interest in more discretionary items. Lowe’s also gained market share in 11 of 20 product categories, according to Chief Executive Robert Niblock. He said that overall, the company gained 10 basis points of total-store market share during the quarter. (more…)
Tags: Collar, Earnings, HD, Home Depot, LOW, Lowe's, Options Strategies, options trading
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