by Ian Harvey
December 09, 2018
Options Trades to Consider Based on Expected Earnings Reports:
Monday, December 10
Stitch Fix Inc (NASDAQ: SFIX),
an online personalized styling service company, will report earnings after the
market closes. The consensus earnings estimate is $0.03 per share on revenue of
$357.80 million; but the Whisper number is at $0.05 per share. The company's
guidance was for revenue of $354.00 million to $360.00 million.
Shares of Stitch Fix fell roughly 8% Friday as part of the
larger market downturn. The online personal styling firm’s stock has also
tanked far worse than the broader retail industry over the last three months,
which likely means that the newly public company’s future is not stable at this
Note that the company’s current full-year 2019 earnings are
projected to come in at $0.13 per share, which would mark a decline from fiscal
Nine investment analysts have rated the stock with a hold
rating and four have assigned a buy rating to the stock. The stock currently
has a consensus rating of “Hold” and a consensus target price of $33.18.
Short interest has increased by 40.8% and overall earnings
estimates have been revised lower since the company's last earnings release.
Option trade to consider: Buy the SFIX DEC 21 2018 25.000 PUT at approximately $2.10.
Tuesday, December 11
American Eagle Outfitters (NYSE:AEO), a specialty retailer,
operating over 1,000 retail stores and online at ae.com and aerie.com in the
United States and internationally, is expected to report earnings after the
market closes. The consensus earnings estimate is $0.47 per share on revenue of
$1.04 billion; but the Whisper number is for $0.48 per share. The company's
guidance was for earnings of $0.45 to $0.47 per share. Consensus estimates are
for year-over-year earnings growth of 27.03% with revenue increasing by 8.28%.
AEO had a
great run to start the year, but the stock has now lost more than 30% since
reaching five-year highs in August. It has trended steadily lower since
early summer. American Eagle operates in a highly competitive and changing teen
fashion market. The retailer posted strong numbers at the end of August, but the
results were not enough to bring enthusiasm back into the stock.
Short interest has increased by 12.9% since the company's
last earnings release.
Option trade to consider: Buy the AEO DEC 21 2018 18.000 PUT at approximately $0.75.
Thursday, December 13
networking technology vendor Ciena Corporation (NYSE:CIEN), will
report earnings before the market opens. The consensus earnings estimate is
$0.48 per share on revenue of $860.31 million; but the Whisper number is for $0.52
per share. The company's guidance was for revenue of $845.00 million to $875.00
million. Consensus estimates are for year-over-year earnings growth of 4.35%
with revenue increasing by 15.56%.
Ciena CEO Gary B. Smith sold 9,600 shares of the firm’s stock in a transaction that occurred on Wednesday, November 14th. The shares were sold at an average price of $32.74, for a total value of $314,304.00.
Ciena SVP James E. Moylan, Jr. sold 2,000 shares of the firm’s stock in a
transaction on Wednesday, November 28th. The stock was sold at an average price
of $31.74, for a total value of $63,480.00.
rated the Ciena’s stock as a Hold in a research note published on Tuesday,
November 20th, 2018. Other Wall Street experts have also recently posted
reports on these shares. Northland Capital gave the stock a Market Perform
rating in a research note from Monday, October 1st, 2018. Morgan Stanley rated
the stock as an Equal-Weight in a research note dated Thursday, September 13th,
At the moment, there are a total of 21 analysts who cover Ciena stock. Among that group, 6 of them gave BUY ratings, 8 of them rated the stock as OUTPERFORM, and 7 recommended it as HOLD.
Option trade to consider: Buy the CIEN DEC 21 2018 30.000 PUT at approximately $1.00.
The digital media and marketing software firm, Adobe
Systems Incorporated (NASDAQ:ADBE), will release its most recent quarterly earnings report after the market closes.
The consensus earnings estimate is $1.89 per share on revenue of $2.42 billion;
but the Whisper number is higher at $1.93 per share. The company's guidance was
for earnings of approximately $1.87 per share. Consensus estimates are for
year-over-year earnings growth of 51.20% with revenue increasing by 20.60%.
Adobe has done a great job converting its business to a
cloud-based subscription model. The company has grown earnings 45% annually
over the last five years and analysts expect additional growth of 33% per annum
over the next five years. Adobe has a solid earnings track record with better
than expected earnings and revenues in each of the last four quarters.
Last quarter, Adobe’s revenues climbed 24% from the year-ago
period to reach a new company record of $2.29 billion. Plus, the tech company’s
cash flow from operations hit $955 million. “Students,
creatives, enterprises and governments trust Creative Cloud, Document Cloud and
Experience Cloud to create and deliver the transformative digital experiences
required to compete today,” CEO Shantanu Narayen said in a company
Overall earnings estimates have been revised higher since
the company's last earnings release.
Of the 23 analysts who cover the stock 14 rate it Strong Buy, 1 rate it Buy and 8 rate it Hold.
Zacks Investment Research upgraded shares of from a hold rating to a buy rating in a report released last Thursday. They currently have $286.00 price target on the software company’s stock.
Adobe stock is down roughly 9% over last the three months as part of the larger market pullback but note that ADBE is still up over 40% in 2018, despite investors having ditched high-flying tech picks in recent months, and could extend those gains with another great report.
Option trade to consider: Buy the ADBE DEC 21 2018 240.000 CALL at approximately $8.75.
Costco Wholesale Corporation (NASDAQ:COST), with its
subsidiaries is engaged in the operation of membership warehouses in the United
States and Puerto Rico, Canada, the United Kingdom, Mexico, Japan, Australia,
and through majority owned subsidiaries in Taiwan and Korea, will report
earnings after the market closes. The consensus earnings estimate is $1.61 per
share on revenue of $34.53 billion; but the Whisper number is $1.62 per share.
Consensus estimates are for year-over-year earnings growth of 18.38% with
revenue increasing by 8.55%.
Costco has informed the market Thursday before opening that
net retail sales came in at $12.77 billion in November reflecting a 9.8% growth
from $11.63 billion a year ago.
Comparable sales grew 12.2% in the U.S., 1.8% in Canada and
0.7% in the international market. The company's total comparable sales climbed
9.2% in November. Sales from e-commerce grew 46.1%.
Of late, the earnings calendar has not been kind to
retailers like Costco and analysts are starting to question the high valuation.
Since Costco has already disclosed sales numbers, margins, however, have not
been disclosed and will be closely watched, given Costco is facing the same
pricing and wage pressures as other retailers.
The U.S. Federal Reserve's continuing policy of gradual rate increases will discourage investments, squeeze revenues and profit of most U.S. companies, and produce a general downtrend of publicly traded U.S. equities.
Option trade to consider: Buy the COST DEC 21 2018 220.000 PUT at approximately $4.00.
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.
OUT WHILST THE GOING IS GOOD!
GREED CAN BE THE UNDOING OF A GOOD PROFIT!
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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?”
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. 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......READ MORE.....
The Decision Is Yours!
Before You Trade Consider This Strategy……
"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……