Unusual Options Activity in ITT Educational Services, Inc. (ESI) Yields Incredible Profits

ITT Educational Services Inc. (ESI) is a provider of postsecondary degree programs in the United States to approximately 55,000 students. ESI is trading at $4.44 around the lower end of its 52 week range of $1.93-$18.83. Year to date the stock has severely underperformed the market this year, falling 53.69%. The stock ripped higher today by about 84.65% or $2.04 during the trading session.

Early on a trader bought 2,309 of the ESI June 3.0 Calls for $0.45 when the stock was trading at $2.60. This order was recorded about an hour after the open on OptionHacker, and the stock rose about $2.00 to $4.60 after the trade hit the tape. Over 2,700 of these June 3.0 Calls have been traded today hinting at bullish sentiment. The ESI June 3.0 Calls have traded as high as $1.65 today making this a very profitable trade. This stock has been trading below the Ichimoku Cloud for a few weeks now until it ripped to the upside in today’s session and continued to trade above the Ichimoku Cloud.

Trade: A trader bought 2,309 of the ESI June 3.0 Calls for $0.45
Risk: $45 per 1 lot
Breakeven: $4.89

If a trader bought a 20 lot of these puts they would have profited $2,400 at the highs on $900 in risk. This is a great example of profitable UOA.

Next Week’s (Week of June 1st) Market Preview

The first week of June will kick off on Monday with Personal Income and Outlays for April followed by a report of the Purchasing Managers’ Manufacturing Index (PMIs) which provides insight into a select number of companies in the private sector of the economy. Following this release is the ISM manufacturing composite index presenting the general direction of production, new orders, order backlogs, their own inventories, customer inventories, employment, supplier deliveries, exports, imports, and prices. The last report to listen to on Monday is the Construction Spending on residential, non-residential, and public projects. Trends in the construction data most likely carry valuable clues for the stocks of home builders and large-scale construction contractors.

On Tuesday, only one report will be released. The major event to look for is Factory Orders for both durable and non-durable goods. This report most likely correlates with economic growth because that translates to higher corporate profits.

Wednesday has a few more releases to watch out for such as the ADP Employment Report which represents 400,000 U.S. business clients and approximately 23 million U.S. employees working in all private industrial sectors. Next is the International Trade release which breaks down the export, import and trade balances. Many traders will most likely be watching this to see how the strong USD has affected international trade. Three more releases later on Wednesday include the ISM Non-Mfg Index representing more than 375 firms from various sectors across the U.S. The next release will be the Energy Information Administration (EIA) Petroleum Status Report indicating weekly information on petroleum inventories in the U.S. whether extracted here or abroad. Last to be reported will be the Beige Book which is utilized in the Federal Open Market Committee monetary policy meetings and is a compiled list of economic data from the 12 Federal Reserve Districts.

Thursday has only a few reports to be released at the opening bell. First will be the Jobless Claims numbers enlightening the public on unemployment claims over the past week. Following this report is the Productivity and Costs Report which measures the growth of labor efficiency in producing economy’s goods and services which is most likely used as an indicator of future inflationary trends.

The last day of the trading week, Friday, will be releasing one report, but a very detailed one. The Employment Situation will be released and closely watched especially for wage growth, a key metric the Fed has been citing recently.

Key Earnings Reports Next Week

  • After the Bell on Tuesday | Dollar General Corportation (DG)
  • Before the Open on Wednesday | Vera Bradley, Inc. (VRA)
  • After the Bell on Wednesday | Five Below, Inc. (FIVE)
  • Before the Bell on Thursday | J.M. Smucker Co. (SJM)
  • After the Bell on Thursday | Zumiez Inc. (ZUMZ)

Splunk, Inc.’s (SPLK) Earnings Preview, Earnings Out After the Closing Bell

Splunk, Inc. (SPLK) provides software products for users to manipulate and analyze data regardless of format or source. The stock is currently trading around $69.85 at the upper end of its 52 week range of $39.35-$74.88. The stock has been outperforming the market this year rallying 17.95% year to date. SPLK is scheduled to report earnings after the bell today, and the stock is ripping up ahead of the release. SPLK is higher on the session by around $0.19 or 0.51% ahead of the closing.

Over the past 12 quarters SPLK has rallied on earnings day 8 times with an average move of 9.57%. SPLK appears bullish on a chart going into the release approaching its high of the past 20 trading days of $70.97. Over the past 12 quarters SPLK has rallied from earnings to the nearest options expiration 8 times with an average move of 9.38%. The stock looks as if it could continue its trend and rip to the upside in today’s session. The cloud appears to be consistently changing its trend. Investors are mainly looking to see if Splunk will turn a profit for the first time since its IPO in 2012. Other points to watch for are how the rollout of Splunk light fared in the recent quarter, and how the customer base increase of 7% will affect earnings.

The options market is currently implying a move of around $5.5 or 7.91% in SPLK by this Friday’s close giving us targets of $74.35 and $64.35.

Earnings Preview: Deckers Outdoor Corp. (DECK)

Deckers Outdoor Corp. (DECK) designs footwear, apparel and accessories for high performance activities and everyday casual lifestyle use. The stock is currently trading around $73.39 at the lower end of its 52 week range of $66.65-$99.88. The stock has been underperforming the market this year selling off 19.66% year to date. DECK is scheduled to report earnings after the bell today, and the stock is on the rise ahead of the release. DECK is higher on the session by around $1.72 or 2.32% ahead of the closing bell.

Over the past 12 quarters DECK has rallied on earnings day 5 times with an average move of 12.98%. DECK appears bearish on a chart going into the release having hit its 20-day low yesterday. Over the past 12 quarters DECK has rallied from earnings to the nearest options expiration 5 times with an average move of 14.21%. The Ichimoku Cloud appears to be consistently changing its trend. Investors are looking to see how foreign exchange has affected revenue as well as if there is a decrease or increase in wholesale order cancellations. Another point to focus on is the increase or decrease of reliance on UGG brand to drive profits. UGG products have been a catalyst for profits in the past and investors look for an increase or decrease in sales.

The options market is currently implying a move of around $6.7 or 9.13% in DECK by this Friday’s close giving us targets of $66.69 and $80.09.

What to Look for in Game Stop, Corp. (GME) Earnings After the Bell

Game Stop, Corp. (GME) is one of the biggest video game and consumer electronics retailers. The stock is currently trading around $40.04 around the middle of its 52 week range of $31.69-$46.59. The stock has been outperforming the market this year rallying 17.90% year to date. GME is scheduled to report earnings after the bell today, and the stock is rallying ahead of the release. GME is higher on the session by around $0.60 or 1.52% ahead of the closing bell.

Over the past 12 quarters GME has rallied on earnings day 7 times with an average move of 7.71%. Over the past 12 quarters GME has rallied from earnings to the nearest options expiration 7 times with an average move of 8.64%. The cloud seems flat going forward, not indicating conviction in either direction. Investors are looking to see how the closure of stores and foreign exchange headwinds will affect EPS. Other points to watch for are sales of previous generation consoles and the lack of new games being released lowering sales. In the previous quarter the release of new games such as Mortal Kombat drove sales, but investors wait to see how GME will be effected with no new game releases this quarter.

The options market is currently implying a move of around $2.5 or 6.25% in GME by this Friday’s close giving us an upside target around $42.50.

Ulta Salon Cosmetics & Fragrance, Inc. (ULTA) Earnings after the Closing Bell, What to Look For

Ulta Salon, Inc. (ULTA) is a beauty retailer, who provides salon products and salon services. The stock is currently trading around $153.80 at the upper end of its 52 week range of $83.54-$158.97. The stock has been outperforming the market this year rallying 20.34% year to date. ULTA is scheduled to report earnings after the bell today, and the stock is falling ahead of the release. ULTA is lower on the session by around $0.98 or 0.63% ahead of the closing bell.

Over the past 12 quarters ULTA has rallied on earnings day 10 times with an average move of 11.57%. ULTA however appears bullish on a chart going into the release having risen $5.50 over the past couple days. Over the past 12 quarters ULTA has rallied from earnings to the nearest options expiration 10 times with an average move of 11.60%.The stock looks as if it could continue its trend and rip to the upside in today’s session. The area between the Senkou Span A line and the Senkou Span B line appears to be consistently changing its trend. Investors are looking to see how pulling back on discounts as well as revamping the loyalty program will affect the average order value. Other points to watch for are results from heavier investing in better messaging, more targeted promotions and employee training.

The options market is currently implying a move of around $14.4 or 9.40% in ULTA by this Friday’s close giving us targets of $139.4 and $168.2.

Michael Kors Holding Limited (KORS) Sees Bearish Options Activity after Earnings

Michael Kors Holding Limited (KORS) is a major player in global luxury apparel and accessories. KORS is trading at $46.62 around the lower end of its 52 week range of $46.10-$98.96. Year to date the stock has underperformed the market by quite a bit selling off 37.91%. The stock dropped today by about 23.04% or $13.96. This move happened after KORS released disappointing earnings before the bell this morning.

Early on a trader bought 9,000 of the KORS June 45.0 Puts for $0.35 when the stock was trading at $49.40. This order was recorded about an hour after the open on OptionHacker, and the stock dropped about $2.78 to $46.62 after the trade hit the tape. Over 16,300 have been traded today hinting at bearish sentiment. The KORS June 45.0 Puts for $0.35 have traded as high as $1.15 today making this a profitable trade. This trader is most likely establishing a short position expecting the stock to continue its bearish trend for a few weeks. This stock has been trading below the cloud for a few weeks now. The Ichimoku Cloud continues to grow and points the technical analysis in the direction of a bearish trend due to an increasing cloud size indicating a hard to reverse trend.

Trade: A trader bought 9,000 of the KORS June 45.0 Puts for $0.35
Risk: $35 per 1 lot
Breakeven: $44.65

If a trader bought a 20 lot of these puts they would have profited $1,600 at the highs on $700 in risk. A great example of profitable UOA.

Abercrombie and Fitch Co. (ANF) Sees More Unusual Bearish Options Activity Ahead of Earnings

Abercrombie and Fitch Co. (ANF) is a major clothing designer and retailer catering mostly to teens. ANF is trading at $19.99 around the lower end of its 52 week range of $19.34-$45.50. Year to date the stock has underperformed the market by quite a bit, at 30.24%. The stock dropped today by about 0.55% or $0.11. This move happened after an unusually large number of bearish options hit the tape yesterday and this morning.

Early on yesterday a trader bought 3,500 of the ANF May 29th Weekly 18.5 Puts for $0.32 when the stock was trading at $20.73. Over 3,600 contracts of the May 29th Weekly 18.5 Puts were traded yesterday hinting at bearish sentiment. The May 29th Weekly 18.5 Puts have since traded as high as $0.56 today making this a highly profitable trade. Today a trader bought 1,027 of the ANF May 29th Weekly 17.0 Puts for $0.13. This order was recorded about an hour after the open on OptionHacker. Over 5,500 contracts of the May 29th Weekly 17.0 Puts have been traded today hinting at further bearish sentiment into earnings.

Over the past 8 quarters ANF has rallied on earnings day only 3 times with an average move of 8.30%. ANF also appears bearish on a chart going into the release. The stock has been trading below the Ichimoku Cloud for around 4 weeks now, and appears to be continuing the downward trend in today’s session. The area between the Senkou Span A line and the Senkou Span B line appears to be increasing its size indicating a trend that is harder to reverse. Due to the stock’s historical performance on earnings day and weak technical data, it is hard to justify anything but a bearish trade in ANF.

The options market is currently implying a move of around $2.10 or 10.5% in ANF by this Friday’s close giving us a downside target around $17.82.

Palo Alto Networks, Inc. (PANW) Looking Strong on a Chart Ahead of Earnings

Palo Alto Networks, Inc. (PANW) provides a security platform to aid businesses, government entities and other organizations to restrict the number of applications running on their networks to prevent breaches. The stock is currently trading around $162.50 at the upper end of its 52 week range of $66.77-$165.09. The stock has been outperforming the market this year rallying 32.72% year to date. PANW is scheduled to report earnings after the bell today, Wednesday the 27th, and the stock is selling off ahead of the release. PANW is lower on the session by around $1.34 ahead of the closing bell.

Over the past 8 quarters PANW has rallied on earnings day 6 times with an average move of 6.30%. PANW also appears bullish on a chart going into the release. The stock has been trading above the Ichimoku Cloud for around 4 weeks, and looks as if it could rip to the upside in today’s session. The area between the Senkou Span A line and the Senkou Span B line appears to be steadily maintaining its size indicating a trend that is harder to reverse. This cloud continues maintaining its size still indicating a bullish outlook. Due to the stock’s historical performance on earnings day and strong technical data, it is hard to justify anything but a bullish trade in PANW.

The options market is currently implying a move of around $9.00 or 5.5% in PANW by next Friday’s close giving us an upside target around $171.50.

Is Abercrombie and Fitch Co. (ANF) Unusual Options Activity Ahead of Earnings Hinting at a Move Lower?

Abercrombie and Fitch Co. (ANF) is a major clothing designer and retailer catering mostly to teens. ANF is trading at $20.56 around the upper end of its 52 week range of $19.34-$45.50. Year to date the stock has underperformed the market by quite a bit, at 28.46%. The stock dropped today by about 1.44% or $0.30. This move happened after an unusually large number of bearish options hit the tape this morning.

Early on a trader bought 3,500 of the ANF May 29th Weekly 18.5 Puts for $0.32 when the stock was trading at $20.73. This order was recorded about half an hour after the open on OptionHacker, and the stock dropped about $0.29 to $20.44 after the trade hit the tape. Over 3,600 contracts of the May 29th Weekly 18.5 Puts have been traded today hinting at bearish sentiment. The May 29th Weekly 18.5 Puts for $0.32 have traded as high as $0.34 today making this a profitable trade. This trader is most likely establishing a short position ahead of ANF earnings later on this week. I will likely look to get short ANF ahead of the earnings release based on the bearish activity in the options market we are seeing.

Trade: A trader bought 3,500 of the ANF May 29th Weekly 18.5 Puts for $0.32
Risk: $32 per 1 lot
Breakeven: $18.18