American Express Co. (AXP) is a global service company with principal products and services being charge and credit payment card products, travel-related services offered to consumers and businesses around the world. The stock is currently trading around $78.79 at the lower end of its 52 week range of $75.75-$94.89. The stock has been under performing the market this year falling 15.33% year to date. AXP is scheduled to report earnings after the closing bell today, and the stock is down $0.15 or 0.20% on the session ahead of the close.
Over the past 12 quarters AXP has rallied on earnings day 4 times with an average move of 2.76%. The stock appears bearish on a chart going into the release having traded below or in the Ichimoku Cloud since March on the daily bars. Over the past 12 quarters AXP has rallied from earnings to the nearest options expiration 4 times with an average move of 3.48%. The stock looks as if it could continue falling following the recent bearish trend. Investors are expecting to see the company suffer from a rise in expenses, loan loss provisions, and foreign currency fluctuation. After an intensive technical analysis and poor earnings performance in the past it is hard to justify anything, but a short position on AXP.
The options market is currently implying a move of around $2.13 or 2.7% in AXP by this Friday’s close giving us targets of $76.66 and $80.92.
Trade: Buy this week’s 77.5-76 Put Vertical spread for $0.31
Risk: $31 per lot
Reward: $119 per lot
Break Even: $77.19