Where does American Eagle Outfitters, Inc. (AEO) Stand Before Earnings?

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American Eagle Outfitters, Inc. (AEO) is a global retailer for clothing and personal care products. The stock is currently trading at the upper end of its 52 week range of $10.12-$18.12 around $15.68. The stock has been trading strongly this year relative to the market with shares appreciating around 13% year to date. AEO is scheduled to report earnings before the bell tomorrow, and the stock is looking fairly weak ahead of the release. AEO is lower on the session by around 1.9% ahead of the report.

The stock is likely lower today due to American Eagle’s weak historical record on earnings day. Over the past 12 quarters AEO has sold off on earnings day 8 times with an average move of 8.17%. The stock has also sold off 7 times in 12 quarters from earnings day to the nearest options expiration. AEO also appears very weak on a chart going into the release. The stock is trading at the bottom of the Ichimoku Cloud on the daily bar, and looks as if it could break to the downside in today’s session. 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 AEO.

The options market is currently implying a move of around $1.45 or 9.1% in AEO by this Friday’s close giving us a downside target around $14.23.

Potential Bearish Earnings Trade: Buying the AEO May 22nd Weekly 15-14 Put Spreads for $0.25
Risk: $25 per 1 lot
Reward: $75 per 1 lot
Breakeven: $14.75

Bed Bath & Beyond Inc. (BBBY) Options Traders See Explosive Profits in a Few Short Hours

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Bed Bath & Beyond Inc. (BBBY) closed today’s trading session around $73.35, gaining just over 5.3% on the day. BBBY has been trading in a 52 week range of $54.96-$79.64. The stock has been underperforming the market this year with shares falling by 3.7% year to date. Although investors may be unhappy with the stock’s performance this year options traders were able to clean up today as the stock ripped after some bullish unusual options activity it the tape.

Earlier this morning a trader bought 1,418 BBBY May 70.5 calls for $0.46 when the stock was trading $70.77. Over 4,700 contracts traded on this line as the stock ripped to session highs of $73.55. These calls exploded in value as the stock moved higher and traded as high as $2.81 on the day. This move happened in a matter of hours and the position expired on the close today. The calls closed only slightly off of their highs at $2.68. This means that a trader that bought these calls would have seen their position increase in value by a factor of 6. This is another example of a blowout UOA trade.

Trade: A Trader bought 1,418 BBBY May 70.5 calls for $0.46
Risk: $46 per 1 lot
Reward: Unlimited
Breakeven: $70.96

If a trader would have bought a 20 lot of these calls, risking $920, they would have profited
$4,700 at the highs.

Youku Tudou Inc. (YOKU) Sees a Spike in Options Volume

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Youku Tudou Inc.(YOKU) is a Chinese based internet television company that allows users to share video content on a broad range of devices. The company’s stock is currently trading around $22.85 in a 52 week range of $11.85-$24.60. The stock has been massively outperforming the market this year with shares rallying over 28% year to date. Options activity in the name today seems to suggest that traders are expecting this run higher to continue.

Earlier in today’s session several large blocks of calls were bought in YOKU. A trader bought nearly 3,000 YOKU May 22nd Weekly 22 calls for $1.04. Shortly after that order hit the tape another block of 1,000 YOKU May 22 calls were bought for $0.20. By the end of the day over 8.4 times YOKU’s average daily options volume had traded and at the money implied volatility touched new 52 week highs.

YOKU stock ripped higher after these calls were bought and gained over 17% on the trading day. These calls moved higher as well with the May 22nd Weekly 22 calls trading as high as $2.00 on the day and the May 22 calls trading as high as $0.95 making both of these trades absolute blowout winners. These trades are amazing examples of how following unusual options activity in weekly and short expiration options can lead to huge profits.

Options Traders Make 20% in Credit Suisse Group AG (CS) In a Matter of Hours

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Credit Suisse Group AG (CS) is currently trading around $27.00 in a 52 week range of $21.01-$30.84. The stock has been performing relatively well this year with shares rallying more than 7.5% year to date. CS saw some interesting unusual options activity in today’s session and traders quick enough to follow it saw some very nice profits.

Early in the session a trader bought 1,100 CS Jun 27 Calls for $0.75. By the end of the day nearly 12,000 contracts traded on that line and nearly 5 times the average daily options volume in CS had come across the tape. The stock moved to the upside after these calls hit and the calls did as well. At the highs of the session these calls traded as high as $0.90 on the day making this a very profitable trade in a short period of time. With CS trading well above the cloud and showing other bullish momentum metrics it seems likely that this trend will continue.

Trade: A trader bought 1,100 CS Jun 27 Calls for $0.75
Risk: $75 per 1 lot
Reward: Unlimited
Breakeven: $27.75

This trade may not be an absolute blowout winner but a trader that bought a 20 lot of these calls would have profited $300 at the highs on $1500 in risk. That’s a 20% profit on risk in a matter of hours.

Trading the EUR/USD on the Ichimoku Cloud

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My favorite technical indicator is the Ichimoku Cloud also referred to as known as “The Cloud.”  This indicator is a free plug-in on TradingView, but a trader must know which time frame to use for the indicator.  The Ichimoku works best on the 4 Hour bar for forex and today we see a great signal for a mild pullback trader who likes to trade with the trend.

Let’s breakdown the trade:

Short EUR/USD at 1.378 at 12PM CST on the close of the bar
STOP LOSS: 1.3835
Target #1: 50% of the Stop: 1.3752
Target #2: 100% of the Stop: 1.372
Target #3: 150% of the Stop: 1.369
Target #4: 200% of the Stop: 1.3656

Once I hit Target #2, if I want, I can move my stop to breakeven.

$560,000 Bearish Bet in Plug Power Inc. (PLUG)

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Plug Power Inc. (PLUG) is an alternative energy technology provider which engages in the design, development, commercialization, and manufacturing of fuel cell systems for markets around the world. We have noticed some interesting unusual options activity in PLUG during today’s trading session. Earlier today, a trader bought 7,000 of the PLUG Apr 4th weekly 7 puts for $0.80. This is a very large order that had this trader putting $560,000 at risk. We believe that order flow this strong sets up well for a short in PLUG with a good reward to risk set up.

My Trade: I bought the PLUG Apr 4th Weekly 7 Puts for $.80
Risk: $80 per 1 lot
Reward: $620 per 1 lot
Breakeven: $6.20

Greeks of this Trade:
Delta: Short
Gamma: Long
Theta: Short
Vega: Long

Trader Makes a $200,000 Bearish Bet in Teck Resources Limited (TCK)

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Teck Resources Limited (TCK) is an integrated mining company with operation in Canada. The stock is currently trading around $21.65 in a 52 week range of $19.98-$30.02. Shares of TCK have been underperforming the market this year with stock falling nearly 17% year to date. Options traders seem to think this trend will continue as orders hitting the tape today are decidedly bearish. Early in today’s trading session a trader bought 6,000 of the TCK May 20-18 put spreads for $0.33. This is a bearish trade that requires this trader to lay out nearly $200,000 in premium. This block also represents volume over 6 times the average daily option volume in TCK.  With shares of TCK trading well below the Ichimoku Cloud and a downward sloping future cloud we believe that this bearish order flow in TCK can justify a short position.

Trade: Buying the TCK May 20-18 Put Spreads for $0.30
Risk: $30 per 1 lot
Reward: $70 per 1 lot
Breakeven: $19.70.

Traders Looking for More Upside in Quanta Services, Inc. (PWR)

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Quanta Services, Inc. (PWR) is a construction and engineering company that provides solutions to the electric, natural gas and oil industries. The company’s stock is currently trading around $36.85 in a 52 week range of $25.26-$37.28. The stock has been strong this year with shares rallying nearly 17% year to date. The options tape has been very bullish today with large blocks of out of the money calls being bought. Earlier a trader bought 2,287 PWR Apr 36 calls for $1.25. This is a very bullish trade that also represents volume nearly 7 times the average daily option volume in PWR. With shares of PWR trading well above the Ichimoku Cloud it is likely that this trader is speculating on further upside in the stock rather than hedging a short stock position. We believe that the chart and the order flow in PWR is strong enough to justify a long position in PWR.

Trade: Buying the PWR Apr 36 Calls for $1.35
Risk: $135 per 1 lot
Reward: Unlimited
Breakeven: $37.35

The Ichimoku Cloud Signals for a Short in FirstMerit Corporation (FMER)

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FirstMerit Corporation (FMER) operates as a bank holding company for FirstMerit Bank, N.A. that provides various banking services to its customers.  We run a proprietary scan of all stocks that break the Ichimoku Cloud to the upside and downside on the daily chart every single day.  Yesterday, out of 30 stocks this was the best signal we saw.  So, based on the downside break of the cloud I got short FMER.

The Trade: Sell FMER Stock at $20.33
STOP LOSS: $22.33
Target #1: $19.83
Target #2: $19.33
Target #3: $18.83
Target #4: $18.33

A Trader Gets Long Apollo Education Group Inc (APOL) Ahead of Earnings

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Apollo Education Group Inc (APOL) is a provider of private education via programs online and on campus. The company’s stock is currently trading around $33.20 in a 52 week range from $16.54-$35.92. The stock has been performing very well this year with shares rising more than 21% year to date. APOL is set to report quarterly earnings on April first and we are seeing some interesting unusual options activity leading into the release. Earlier this morning a trader bought 1,000 of the APOL Apr 4th 34 calls for $1.34. With the options market implying a move of around $3.65 by April 4th expiration it would appear that this trader is getting long the stock expecting a big move higher on earnings. We believe that this order flow is strong enough to signal for a long position in APOL.

Trade: I bought the APOL Apr 4th 34 Calls for $1.46
Risk: $146 per 1 lot
Reward: Unlimited
Breakeven: $35.46