Whole Foods Market, Inc. (WFM) Earnings Preview

Whole Foods Market, Inc. (WFM) is a retailer specializing in organic and natural foods and groceries. The company’s stock is currently trading around $30.80 in a 52 week range of $29.73-$57.57. The stock has been massively under performing the market this year with shares falling nearly 39% year to date. The company is set to report earnings after the bell today and based on metrics we track the stock may be primed for another move lower.

WFM has sold off on 6 of the past 8 quarters with an average move of 9.8% on earnings day. The stock is also looking vey weak on a chart. The stock is lower by over 1.2% today and the Ichimoku Cloud is indicating a strong bearish trend in WFM. The stock is trading well below the cloud and the future cloud is sloping lower. Using our AlphaTracker Indicator we are also able to see that big money is net short WFM stock ahead of the release. For all of these reasons I am looking to get short WFM on earnings.
With the options market implying a move of around $3.20 by this Friday’s close we are able to calculate a downside target of $27.60. Using this level I can set up a potential options trade.

Trade: Buying the WFM Nov 6th Weekly 29.5-27.5 for $0.55
Risk: $55 per 1 lot
Reward: $145 per 1 lot
Breakeven: $28.95

This trade gives a trader a reward to risk ratio better than 2.5-1

Mobileye NV (MBLY) Earnings Preview

Mobileye NV (MBLY) is a developer of software and technology for driver assistance systems and other sensor components in vehicles. The company’s stock is currently trading around $45.30 in a 52 week range of $32.41-$64.48. The stock has performed relatively well this year with shares higher by 11.5% year to date. The company is set to release their most recent quarterly earnings before the opening bell in tomorrow’s session.

MBLY has a relatively weak performance record on earnings day. The stock is lower 4 of the past 6 quarters with an average move of around 2.2%. This shows us a historical pattern of bearish price action on earnings. The chart of MBLY also appears to be confirming this pattern. The stock is now trading well below the Ichimoku Cloud and the cloud is firmly downward sloping. The stock is also trading below value for the month indicating a general bearish sentiment in MBLY going into earnings. With bearish historical price action and a bearish chart setup MBLY seems primed for a move lower on earnings.

With the options market implying move of around $4.30 by Friday’s close we can calculate a downside measured move of 9.5% for MBLY. Using the target I can look to set up an options trade with an expectation for the stock to trade around $41.00 by Friday.

Trade: Buying the MBLY Nov 6th Weekly 43-41 Put Spreads for $0.40
Risk: $40 per 1 lot
Reward: $160 per 1 lot
Breakeven: $42.60

This trade sets up right on the downside measured move target and gives a trader a 4-1 reward to risk setup.

How We Got Short Solar City Corp (SCTY)

SolarCity Corporation (SCTY) is a renewable energy company based in California. The company’s stock is currently trading around $29.77 in today’s session and is lower by nearly 22% on the day. The stock has had absolutely dismal performance this year falling nearly 45% year to date. The stock is lower today on quarterly earnings and our head catalyst trader was short ahead of earnings. Here’s how he set up his trade and knew to get short.

SCTY had a bearish historical earnings performance record having sold off 7 of the past 10 quarters with an average move of 7.67%. The chart was also showing bearish patterns going into the release of earnings. The stock was trading well below the Ichimoku Cloud and was also below both of its major moving averages. The cloud was also aggressively sloping lower going into the report. AlphaShark’s AlphaTracker indicator was also showing institutional money positioned net short ahead of the report. With those factors in mind it appeared that SCTY was setting up well for a short.

Using the options market our trader calculated an implied move of $4.25 by today’s close in SCTY. Using this measure a downside target of $33.95 was calculated and an options spread was selected

Trade: Bought the SCTY Oct 30th Weekly 36-34 Put Spreads for $0.55
Risk: $55 per 1 lot
Reward: $145 per 1 lot
Breakeven: $35.45

As the stock gapped lower this morning and continued to sell off our trader was able to exit this spread for $1.98 more than tripling his money overnight.

Is MasterCard Incorporated (MA) Set to Rally on Earnings?

MasterCard Incorporated (MA) is a global transaction and payments company with operations around the world. The company’s stock is currently trading around $99.90 in a 52 week range of $74.47-$99.93. The stock has been performing relatively well this year with shares rallying nearly 15.7% year to date. MA is set to report earnings tomorrow morning and early indications point to a possible rally on earnings day.

MA has rallied 8 of the past 12 quarters with an average move of 3.24%. The stock is also higher 10 of the past 12 quarters form earnings day to expiry. The stock is also looking very strong on the Ichimoku Cloud with shares trading well above the Ichimoku cloud and the stock is just off of 52 week highs. With both historical movement trands and the chart showing bullish patterns I want to be long MA into earnings.

The options market is implying a move of around $3.20 I want to calculate an upside target and set up an options trade. Using this implied move I will set up a trade with a target of $103.10.

Trade: Buying the MA Oct 30th Weekly 101-103 Call Spreads for $0.60
Risk: $60 per 1 lot
Reward: $140 per 1 lot
Breakeven: $101.60

This trade goes to max value if the stock moved to the measured move target and also offers a trader a reward to risk ratio of better than 2-1.

Comcast Corporation (CMCSA) Earnings Preview

Comcast Corporation (CMCSA) is a media company operating a wide range of communications and broadcasting businesses. The company’s stock is currently trading around $62.00 in a 52 week range of $50.01-$64.99. CMCSA is set to report their most recent quarterly earnings tomorrow morning before the market open. Based on the price action and historical earnings record in CMCSA I think it is setting up well for a bullish options play ahead of the report.

CMCSA has rallied 9 of the past 12 quarters on earnings day with an average move of 2.85%. The stock is also higher 9 of 12 times from earnings day to expiry. The stock is also setting up well on a chart. The stock is trading well above the Ichimoku Cloud and has been in bullish territory since breaking higher earlier this month. The stock is moderately higher today but with shares trading well above the cloud and the historical movement record showing a clear bullish patter I would want to get long CMCSA via weekly options.
Using the options market we can calculate an implied move of $2.30 by Friday’s close. With stock at current levels that would give me an upside target of $64.30 by Friday. Using this level I will set up an options spread.

Trade: Buying the CMCSA Oct 30th Weekly 63-64 Call Spreads for $0.30
Risk: $30 per 1 lot
Reward: $70 per 1 lot
Breakeven: $63.30

With this trade I have a better than 2-1 reward to risk ratio and a max profit if the stock trades to the calculated measured move target.

How We Traded AXP for Earnings

American Express Company (AXP) is a global consumer credit card and merchant services company. The company’s stock is trading around $72.10 in today’s session, falling over 5.75% after the company released earnings after the bell yesterday. The stock is lower by more than $4.40 and has traded as low as $71.40 this morning as the firm missed analyst estimates on both EPS and revenues. The firm reported earnings of $1.24/share against estimates of $1.30/share and revenues of $8.2 billion vs. estimates of $8.38 billion. After such dismal numbers short sellers in AXP are celebrating this morning. Our traders caught this move to the downside by establishing a short position ahead of earnings in AXP here’s how they did it.

AXP had a very disappointing track record on earnings day over the past 12 quarters so our expectations were for the stock to be under pressure after this release. In the past 12 releases the stock had sold off 8 times from earnings day to options expiration with an average move of 3.26%. Ahead of the release market makers were implying a move of around $2.30 from the stocks pre-earnings price of $76.75 through the end of the week. Technically AXP was looking rather weak on a chart as well. The stock was trading inside of the Ichimoku Cloud but had failed to break old upside resistance into the report. With a bearish historical track record and a neutral chart our trader wanted to get short AXP into earnings.
Using the implied move of $2.30 a downside target for Friday’s close of $74.45 was calculated and an options spreads was selected.

Our trader bought the AXP Oct 23rd Weekly 75.5-74.5 Put Spreads for $0.28
Risk: $28 per 1 lot
Reward: $72 per 1 lot
Breakeven: $75.22

On the open this morning our trader was able to exit these spreads for $0.96 more than tripling his money overnight. This is a perfect example of how a thoughtful analysis ahead of earnings can lead to huge winners.

Does Deere & Co (DE) Weak Historical Performance Mean it’s a Good Short?

Deere & Co (DE) is a manufacturer of heavy machinery and vehicles for agricultural, forestry and construction applications. The stock is currently trading around $91.20 in a 52 week range of $78.88-$98.23. DE has performed relatively well this year with shares rallying 3.2% year to date. Despite the stocks relatively strong performance this year its chart and historical performance record are indicating it might be a good short ahead of earnings before the bell tomorrow.

DE is set to report earnings tomorrow before the opening bell and the stock record on earnings day is extremely bearish. Over the past 12 quarters the stock sold off on earnings day 9 times with an average move of 2.64%. Currently the options market is implying a move of around $3.00 (3.3% ) higher or lower by tomorrow’s close. The stock is selling off today and is now below the Ichimoku Cloud on the daily bar. With a weakened chart setups and a dismal performance record DE is appearing to set up well for a short.

Using the implied move I can calculate a downside target for DE by tomorrow’s close. I will look to set up an options strategy targeting a move to $88.20 by tomorrow’s close. With this target in place I can now set up an options trade.

Possible Trade: Buying the DE Aug 90-88 Put Spreads for $0.50
Risk: $50 per 1 lot
Reward: $150 per 1 lot
Breakeven: $89.50

Salesforce.com Inc. (CRM) Looking Weak Ahead of Earnings Tomorrow

Salesforce.com Inc. (CRM) is a cloud computing service that provides customers with customer relationship management platforms. The company’s stock is currently trading around $69.70 in a 52 week range of $51.04-$78.46. The stock has been performing well this year with shares rallying 17.64% year to date. Despite the stocks relatively strong performance through the year CRM is selling off hard ahead of earnings set to be released after the bell today.

The stock has a mixed performance record on earnings. Over the past 12 quarters the stock has rallied 6 times and sold off 6 times with an average move of 6.95%. With stock at current levels options markets are implying that the stock can move higher or lower by $5.35 by tomorrow’s expiration. Although the historical performance of the stock is mixed the chart is starting to look much weaker in CRM. The stock is lower by nearly 3.5% today and is breaking out of value for the month. The stock is now also firmly below the Ichimoku Cloud indicating a move into bearish territory. With a mixed performance history and a weak chat I believe CRM is setting up well for a short position via options.

Using the move implied by the options market I can calculate a downside target of $64.35. I can use the downside target to set up a trade.

Possible trade: Buying the CRM Aug 66-64 Put Spreads for $0.50
Risk: $50 per 1 lot
Reward: $150 per 1 lot
Breakeven: $65.50