Macy’s, Inc (M) is a luxury retailer with omnichannel operations and 823 brick and motor stores. The company’s stock is currently trading around $47.00 in a 52 week range of $45.83-$73.61. The stock has been massively underperforming the market this year with shares selling off 28.5% year to date. Macy’s is set to report their most recently quarterly earnings report ahead of the open tomorrow and it looks like the stock might be primed for further downside on the report.

M has sold off 7 of the past 12 quarters on earnings day with an average move of around 4.70%. The options market is implying a move of around $4.65 by Fridays close meaning the expected move for M on earnings is around 9.9%. In addition to the historical weakness we see in M the chart also implies bearish sentiment going into earnings. Although the stock is getting a bit of a bid today the overall trend is still decidedly bearish. The stock is trading well below the Ichimoku Cloud and the cloud is strongly negatively sloping. According to the cloud M has not been in bullish territory since late July.
With both historical and technical metrics setting uip for a short I want to get short M on earnings with a downside target of $42.35.

Potential Trade: Buying the M Nov 13th Weekly 43.5-42.5 Put Spreads for $0.30
Risk: $30 per 1 lot
Reward: $70 per 1 lot
Breakeven: $43.20

This trade offers a trader a better than 2-1 reward to risk setup.

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) 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.

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.

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) 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.

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.