Adobe Falters On Earnings !

Selling Adobe Systems Options Call
Before Earnings!

A Great Move!

by Ian Harvey

December 14, 2018

Share

Adobe Systems Incorporated (NASDAQ:ADBE) reported yesterday after the market closed. “Earnings Predictions Members” were advised to buy a call option on the stock, which has already more than doubled since Monday. Now we can determine if it was better to sell before the earnings with substantial profits; or wait until after the report. Read the previous article “Adobe Systems – Take Profit Before Earnings Report?

DECISION TIME!

It is sometimes best to exit a trade, if there is already sufficient profit accrued, before an earnings report is presented. Let us see how this pans out!!

The Trade……

** OPTION TRADE: Buy ADBE DEC 21 2018 240.000 CALL at approximately $8.75.

Movement of Option Price……

Traders were able to enter the trade at $7.40 on Monday.

On Tuesday the price of the option trade hit $15.84. At this stage, and exiting the trade now,  a total potential profit of 114% could have been made. This would also relief any concerns of stock direction after the report.

Wednesday saw the bid price reach $18.60 but no takers – a potential profit of 151% could have been realized if so desired!

Thursday saw the options price reach $14.50 – good for potential profit of 96%.

Since the earnings report doesn’t come out until after the market closes, for those that wish to exit before the report, and hadn’t already done so, another chance is very likely.

AS ALWAYS THE DECISION IS YOURS!

The Earnings Report…..

Adobe Systems came out with quarterly earnings of $1.83 per share, missing the Consensus Estimate of $1.89 per share, and far below the whisper number of $1.93. This compares to earnings of $1.26 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents an earnings surprise of -2.86%. A quarter ago, it was expected that this software maker would post earnings of $1.69 per share when it actually produced earnings of $1.73, delivering a surprise of 2.37%.

Also, Adobe posted revenues of $2.46 billion for the quarter ended November 2018, surpassing the Consensus Estimate of $2.42 billion. This compares to year-ago revenues of $2.01 billion.

ADBE stock declined about 1.6% after the bell on Thursday following the company's quarterly earnings results, which did see its profit beat what analysts, were calling for. Shares had been gaining just over 1% before the end of the day during regular trading hours.

Pre-market trading (6.20am) shows that ADBE is down another $5.58 or 2.25%. If the futures are any indication of the opening for the stock market today, then expect Adobe to continue downwards.

“It has been very beneficial to exit this trade before the earnings report.”

Just to Re-iterate…..When To Exit A Trade Based On Earnings?

It is also worth considering, when options trading earnings reports – “Do we exit on already existing profits or leave the companies to report their earnings and hope for bigger profit?” 

As most traders realize, there is a 50/50 chance that the company stock price could go either way after reporting earnings – even if the report is good, the stock price could reverse – and if you hold a call option, means depletion of an already good profit if it exists. And in this case with Adobe Systems, a potential profit of 114% was already available on Tuesday, one day after executing the trade.

A similar situation can be found if you hold a put option, and a report is not that sound (and you expect a profit from this) but the stock price can, at times move upwards due to traders bias or other external conditions.

When To Exit A Trade Based On Earnings?

It is also worth considering, when options trading earnings reports – “Do we exit on already existing profits or leave the companies to report their earnings and hope for bigger profit?” 

As most traders realize, there is a 50/50 chance that the company stock price could go either way after reporting earnings – even if the report is good, the stock price could reverse – and if you hold a call option, means depletion of an already good profit if it exists. And in this case with Adobe Systems, a potential profit of 114% was already available on Tuesday, one day after executing the trade.

A similar situation can be found if you hold a put option, and a report is not that sound (and you expect a profit from this) but the stock price can, at times move upwards due to traders bias or other external conditions.

An Important Note: That these suggestions for options trade considerations require investors/traders to use their own discretion as to when to enter or exit! As well, it is advisable to do further research and due diligence before executing your trade.

It is sometimes best to exit a trade, if there is already sufficient profit accrued, before an earnings report is presented. GREED can be the undoing of a nice profit!

also....

"Trading Capital Management" is a key component of your trading strategy. The strategy, on which we base our trades to achieve maximum profit, and to minimize loss, is contingent on using an equal amount of money for each trade.……continue reading this article……

Our proven track record says it all!!

Members of Stock Options Made Easy are provided with an extensive reason as to which direction a stock will move after earnings, followed up by a recommended options trade.

If you not a member and interested in being part of this profitable action just CLICK HERE.

Other Membership Options…….

If you interested in "Earnings Predictions" just click here……

or "Mentorship Program".....click here....


Best of Trading,
Ian Harvey
Director of Stock Options Made Easy


Share



”Success is simple. Do what's right, the right way, at the right time.”


Option Tip for your Success!
Options traders are not successful because they win.
Options traders win because they are successful.



Back to Stock Options Made Easy Home Page from Adobe Earnings Falters!