by Ian Harvey
April 19, 2018
OUT WHILST THE GOING IS GOOD!
GREED CAN BE THE UNDOING OF A GOOD PROFIT!
American Express Company (NYSE:AXP)
Here is an update of American Express’s winning options call trade after reporting earnings. This options trade was recommended as a consideration in the article Earnings Predictions for the Week Beginning April 16, 2018”; which produced excellent potential profits of 270% -- and still climbing -- within a short period of executing the trade!
YOU NEED TO BE IN TO PROFIT!
The Trade to Consider……
American Express Company (NYSE:AXP), a credit card issuer, will report after the market closes. Consensus calls for earnings of $1.73 per share. The company earned $1.34 during the same period last year.
The catalyst for the growth in AXP is an expansion of the consumer base it provides loans to, with loans revenue increasing by 14% in the last quarter and card member spending was up 11%. The board looks to grow consumer base over margins which will increase net income in the future.
AXP may be able to increase long-run operating revenue by expanding OptBlue. OptBlue is a program pursued by Amex to increase the acceptance of Amex credit cards in small businesses.
The reduction in corporate tax rate will increase earnings in the future, leaving more free cash flow to be used for buybacks which will increase the company's share price over time.
American Express has established a solid niche for itself as a financial services provider for status-oriented and high-income individuals and organizations. And the company does a great job of satisfying that specific niche of the market.
With low unemployment and rising wages, consumer confidence is strong which is great for payment processors like American Express, and should drive shares higher once the overall market regains its strength.
Of the 20 analysts who cover the stock, eight rate it a “strong buy”, and 12 rate it a “hold”.
OPTION TRADE TO CONSIDER: Buy the AXP MAY 18 2018 95.000 CALL at
American Express reported first-quarter earnings that exceeded analysts' expectations; pushing the stock up by more than 7.6%, moving past the psychological level of $100.
Amex beat estimates on both the top and bottom line. Earnings of $1.86 per share and revenue of $9.72 billion handily beat expectations of $1.71 and $9.46 billion, respectively. This represented 12% revenue growth, fueled by higher cardholder spending, and 38% earnings growth, which got a big boost from tax reform as well.
The company's effective tax rate was 21.5% for the quarter, even better than the 22% rate the company expected, and down by more than 11 percentage points from a year ago.
The company had upbeat projections for the rest of 2018. American Express had previously forecast 2018 earnings per share in the $6.90 to $7.30 range, and in its first-quarter earnings, the company says that it now anticipates earnings at the high end of this range.
So, for those traders who managed to execute this trade recommended by Stock Options Made Easy; a nice tidy potential profit of 270% was to be made within a couple of days of executing the trade.
Entering the option trade at a price of $2.30; reaching as high as $8.50 (before closing at $8.50); one options contract would provide a profit of $620.00.
ACTION TO TAKE…….
"YOU NEED TO BE IN IT TO WIN IT!"
Now is the time to decide if it is worth continuing to hold this trade or exit on excellent profits. It is nearly always prudent to exit a trade before an unknown incident occurs that could rattle a sound profit, and this is a fine example of such a situation.
As you would have by now realized, many of our trades are based on earnings predictions. This is not to say all trades recommended to members follow this pattern, but during earnings season this strategy has been very profitable.
Our approach is to predict whether a company will beat or miss estimates, whether the stock will appreciate or depreciate as a result and what strategies investors and traders can use. This type of prediction is based on thorough investigation and fundamentally based research, and the results have been very exceptional.
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.
What To Do Now…….
If you interested in being part of this profitable action just click here……