- Posted by Greg Harmon on April 28th, 2016 at 3:25 pm
Expedia, $EXPE, started moving lower in November. After a pause in a bit of a stair step, it fell to a low eventually in mid February. Since then it has been trending higher in a channel. Thursday after the close it reports earnings. Into the report the stock is sitting at the bottom of that rising channel and below its 200 day SMA.
It has momentum moving sideways, not showing a bullish or bearish bent. And the Bollinger Bands® are flat as well. Not a chart to get your attention. But the stock moves about 9% on average for earnings, or about $9.65 at today’s price. That gives a range of 99 to 118, by tomorrow. Options are pricing in a smaller $7.50 move.
Which way will it go? I do not know. But the options open interest gives a possible clue. There is a 110/116 1×2 Call Spread sitting there. This trade looks for a move in the stock higher, preferably to 116 and not above by tomorrow. If you bought it right now, for about $1.00, it is profitable on a close between 111 and 121 tomorrow. It takes a margin account to do this trade though.
You don’t have to have margin or follow that trade to have a shot at making money on that strategy though. Another choice would be to buy a 110/116/122 Call Butterfly. This just adds a long call at the 122 Strike to the 1×2 Call Spread to limit the upside. It takes no margin and only costs 35 cents more, so it is profitable on a close between 111.35 and 120.65 tomorrow.
This is the exact type of analysis given to Premium Users on earnings trades every day.
Want to learn more about Dragonfly Capital Views?
Dragonfly Capital Views Performance Through April 2016 and sign up here
Continued Strength in the Small Cap Russell 2000
Posted by Greg Harmon on April 28th, 2016 at 8:08 am
Tax day started it. It was then I noted that there were Sharks Circling the Russell 2000 chart. The pattern developing at that time looked […]
4 trades for earnings to pay for your morning at Dunkin’ Donuts
Posted by Greg Harmon on April 27th, 2016 at 2:47 pm
The FOMC did not disappoint. They kept rates steady for another meeting. It only took the financial news outlets about 5 minutes to shift their […]
While the FOMC debates, there are Bats in Treasuries
Posted by Greg Harmon on April 27th, 2016 at 8:48 am
Today at 2pm Janet Yellen and her FOMC will release a statement on monetary policy. It is anticipated that there will be no change to […]
Analysis and Trade Ideas for Twitter Earnings
Posted by Greg Harmon on April 26th, 2016 at 1:37 pm
Twitter ($TWTR) is the stock that everyone loves to hate. It seems a bit ironic that traders express this view while using their product, but […]
3 Lines Define the Rise of the Japanese Market
Posted by Greg Harmon on April 26th, 2016 at 8:33 am
Technical Analysis is many things to many people. To the uninformed it may be voodoo or self fulfilling. To some it is quantitative and probabilistic. […]
PPG resetting for a new paint job
Posted by Greg Harmon on April 25th, 2016 at 12:00 pm
PPG $PPG, went though a rough period from July through to today. A strong drop lower followed by a bounce and then another pullback to […]
Top Trade Ideas for the Week April 25, 2016: Bonus Idea
Posted by Greg Harmon on April 25th, 2016 at 7:30 am
Here is your Bonus Idea with links to the full Top Ten: AIG, $AIG, pulled back from a double top in December, finding support at […]
Top Trade Ideas for the Week of April 25, 2016: The Rest
Posted by Greg Harmon on April 24th, 2016 at 12:52 pm
5 Trade ideas excerpted from the detailed analysis and plan for premium subscribers Here are the Rest of the Top 10: Biogen, Ticker: $BIIB […]
SPY Trends and Influencers April 23, 2016
Posted by Greg Harmon on April 23rd, 2016 at 9:02 am
A weekly excerpt from the Macro Review analysis sent to subscribers on 10 markets and two timeframes. Last week’s review of the macro market indicators […]
Gregory W. Harmon CMT, CFA, has traded in the Securities markets since 1986. He has held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
- Searching Expedia for an Earnings Trade
- Premium Earnings 4-28-16: Amazon and LinkedIn
- Continued Strength in the Small Cap Russell 2000
- 4 trades for earnings to pay for your morning at Dunkin’ Donuts
- Premium Earnings 4-27-16: Facebook and Texas Instruments
- While the FOMC debates, there are Bats in Treasuries
- Analysis and Trade Ideas for Twitter Earnings
- Premium Earnings 4-26-16: Apple and US Steel
- 3 Lines Define the Rise of the Japanese Market
- PPG resetting for a new paint job