A Continued Bombardment Of Earnings In The Week Ahead!
by Ian Harvey
August 12, 2017
Profit From A Continued Bombardment Of Earnings
In The Week Ahead!
Volatility struck the stock market in the past week due to President Trump and North Korean Kim Jong Un opening the war-chest of threats.
Looking at the overall results for the major indexes for the past week:
However, it was still the worst week since March for the Dow and S&P, and the worst week since June for the Nasdaq.
For Q2 results have been presented from 456 S&P 500 members or 89.6% of the index’s total market membership. Total earnings for these 456 index members are up +10.9% from the same period last year on +5.8% higher revenues, with 74.3% beating EPS estimates and 68% beating revenue estimates. The proportion of companies beating both EPS and revenue estimates is an above-average 54%.
There have been plenty of positives so far from the early start of the earnings season, and members of Stock Options Made Easy have been benefiting from this situation; here are some of these positive aspects:-
There are now only 44 S&P 500 companies still to report this earnings season, which includes 19 retail members; with Wal-Mart and Home Depot among chain stores reporting earnings in the last busy week of earnings season.
Also, three of China's largest internet companies — Alibaba (BABA), Tencent (TCEHY) and JD.com (JD) — report quarterly earnings after other highflying Chinese peers.
Monthly retail sales data, housing starts and industrial production are among the economic releases expected, and the Fed also releases the minutes of its last meeting.
New clues may also emerge on how the Federal Reserve will start to unwind its massive crisis-era asset purchases.
Keep-in-mind that stocks could be entering a longer period of volatility, with concerns about North Korea's nuclear threat accelerating some selling pressure that analysts had been expecting to see anyway.
There could be a few pull-backs in the weeks ahead; and if so, will likely be shallow and short-lived – short of a major catastrophe - which provides an opportunity to profit from lower entry costs.
A Look Back At Last Week’s Earnings Predictions
Earnings Results for the Week Beginning August 07, 2017
|07 August 2017||CAR Sep 15 2017 31.00 Put||P.P: 37%|
|07August 2017||TWLO AUG 18 2017 30.00 CALL||P.P: 375%|
|08 August 2017||VRX SEPT 15 2017 15.000 PUT||P.P: 48%|
|09 August 2017||MYL SEPT 15 2017 32.5000 Put||P.P: 67%|
|09 August 2017||WB Sept 15 2017 80.000 Call||P.P: 113%|
|10 August 2017||JWN AUG 18 2017 47.500 CALL||P.P: 60%|
|11 August 2017||MGA SEPT 15 2017 47.500 Call||P.P: 33%|
NOTE: P.P: – Potential Profit
Options Trades to Consider Based on Expected Earnings Reports:
Monday, August 14
JD.Com Inc. (ADR) (NASDAQ:JD) -- read article and recommended options trade -- “Option Trade - JD.Com Inc. (ADR) (NASDAQ:JD) Calls - Thursday, August 10, 2017”
Option trade to consider: Buy the JD SEPT 15 2017 50.000 CALL at approximately $1.75.
SYSCO Corporation (NYSE:SYY) -- The food company's consensus earnings per share forecast from the 6 analysts that follow the stock is $0.71. This value represents a 10.94% increase compared to the same quarter last year. In the past year SYY has met analyst expectations once and beat the expectations the other three quarters.
Option trade to consider: Buy the SYY SEPT 15 2017 50.00 CALL at approximately $2.20.
Tuesday, August 15
Dicks Sporting Goods Inc. (NYSE:DKS) -- read article and recommended options trade -- “Cut-to-the-Chase” Recommendations - Week Beginning - Monday, August 07, 2017”
Option trade to consider: Buy the DKS SEPT 15 2017 35.000 PUT at approximately $1.50.
Agilent Technologies Inc. (NYSE:A) -- Analysts expect $0.52 earnings per share, up 6.12 % or $0.03 from last year’s $0.49 per share. A’s profit will be $167.09 million for 28.16 P/E if the $0.52 EPS becomes a reality. Agilent Technologies Inc. has risen 25.96% since August 11, 2016 and is up-trending. It has outperformed the S&P500 by 9.26%.
Option trade to consider: Buy the A SEPT 15 2017 60.000 CALL at approximately $1.50.
Wednesday, August 16
NetApp Inc. (NASDAQ:NTAP) -- The consensus estimate is for adjusted EPS to rise 20% to 55 cents, on revenue of $1.32 billion, up 2%. NetApp is among the leading providers of data storage and management solutions. It's been challenged by intense competition among providers of flash-storage products, a transition to cloud computing, and the emergence of "hyper-converged infrastructure." Shares are nearing sell territory.
Option trade to consider: Buy the NTAP SEPT 15 2017 40.000 PUT at approximately $1.00.
Target Corporation (NYSE:TGT) -- Analysts expect Q2 EPS of $1.21, down 2%, with revenue essentially flat at $16.22 billion. Last month, it offered a brighter Q2 profit outlook on better foot traffic, citing its attempts at modernization. Still, Amazon's plans to buy Whole Foods (WFM), potentially reshaping the way people buy groceries, seems likely to be on the minds of analysts during Target's earnings calls.
Option trade to consider: Buy the TGT Sept 15 2017 55.000 PUT at approximately $1.70.
Thursday, August 17
Alibaba Group Holding Ltd (NYSE:BABA) -- consensus estimates call for adjusted EPS of 92 cents, up 26%, on revenue of $7.06 billion, up 45%. The e-commerce king of China has its tentacles in numerous other markets such as video content and ride-sharing. Last month, RBC Capital Markets raised its price target on Alibaba, saying that fundamental trends "remain impressive."
Option trade to consider: Buy the BABA SEPT 15 2017 155.000 CALL at approximately $5.70.
Ross Stores, Inc. (NASDAQ:ROST) -- Analysts' forecasts the consensus EPS for the quarter at $0.76. The reported EPS for the same quarter last year was $0.71. Anticipate Ross Stores to face challenges relating to strong year-over-year earnings and sales comparisons amid macroeconomic uncertainty and a volatile retail landscape. Further, threats of stiff competition and cannibalization remain.
Option trade to consider: Buy the ROST SEPT 15 2017 55.000 PUT at approximately $1.80.
Friday, August 18
Deere & Company (NYSE:DE) -- Analysts expect EPS to climb 20.5% to $1.88 as revenue grows 17.4% to $6.89 billion. Deere doubled its growth outlook for fiscal 2017 after a blowout report in the last quarter. Tractor and combine-harvester sales have swung back in key emerging markets such as Brazil, the company said. The stock is well extended beyond buy range after breaking out in April and is testing support at its 50-day average.
Option trade to consider: Buy the DE SEPT 15 2017 125.000 PUT at approximately $3.30.
Estee Lauder Companies Inc. (NYSE:EL) -- Analysts expect EPS to fall 2.3% to 42 cents but revenue is seen rising 7.7% to $2.85 billion. Estee Lauder could be a big winner in Amazon's reported partnership with online cosmetics-retailer Violet Grey, which sells Estee Lauder products. Shares are extended above buy range.
Option trade to consider: Buy the EL SEPT 15 2017 100.000 Call at approximately $4.10.
An understanding that the market's going to continue to react in the short term to any further signs of escalation or de-escalation of the geopolitical risk will help plan for a successful and profitable week ahead.
You will notice that most options trades to consider have short-term expiry dates, as the expected movement of the option’s price should occur just prior to, or shortly after, report of earnings. It is entirely up to the individual trader as to whether they add a stop-loss or not.
Also Note: 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.
If you wish to receive more options trading recommendations similar to this, which will help boost your portfolio strategy, get on board with the members of Stock Options Made Easy.
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