Premium Earnings 10-25-16: Apple and Panera Bread
- Posted by Greg Harmon
- on October 25th, 2016
Apple, $AAPL, has been moving higher since making a low in June. It broke above the 112 high from April in September and then fell back to retest it. After holding it has continued higher and consolidating around 118 into earnings. The RSI is in the bullish zone, while the MACD is flat, but positive. Both support more upside. There is support lower at 116 and 112 followed by 109.60. There is resistance at 118 and 119.25 followed by 123 and 126.50 before 129.60. The reaction to the last 6 earnings reports has been a move of about 4.88% on average or $5.75 making for an expected range of 112 to 123.75. The at-the money October 28 Expiry Straddles suggest a smaller $5.05 move by Expiry with Implied Volatility at 56% above the November at 26%. Short interest is low at 1.0%. Open interest is spread from 105 to 118 on the Put side. On the Call side it is spread from 115 to 125, biggest at 120.
Trade Idea 1: Buy the October 28 Expiry 118/120 Call Spread (90 cents) and sell the October 28 Expiry 112 Put for 40 cents.
Trade Idea 2: Buy the October 28 Expiry 118/120/122 Call Butterfly ($0.26) and sell the October 28 Expiry 112 Put for a 25 cent credit.
Trade Idea 3: Buy the October 28 Expiry/November 122 Call Calendar ($0.55) and sell the October 28 Expiry 112 Put for free.
Trade Idea 4: Buy the October 28 Expiry 117/115-114 1×2 Put Spread for free.
#1, #2 and #3 give the upside using leverage and may put you in the stock below 112. #4 gives the downside and may put you in the stock at 112. I like’em all.
Panera Bread, $PNRA
Panera Bread, $PNRA, had been moving up in a slowly rising channel until it fell out of it in September. It found a bottom at the beginning of October and staged a small rally. Yesterday it printed a Shooting Star reversal candle though and it is confirming lower into earnings. The RSI has turned back before making it into the bullish zone with a MACD turning flat below zero. There is support lower at 192 and 188 followed by 184 and 179. There is resistance above at 200 and 202.50 followed by 203.50 and 206 then 208. The reaction to the last 6 earnings reports has been a move of about 5.28% on average or $10.30 making for an expected range of 184.50 to 205. The at-the money November Straddles suggest a larger $13.80 move by Expiry with Implied Volatility at 33% above the December at 28%. Short interest is high at 15.5%. Open interest on the Put side is biggest at 180 and then some smaller size at 185 and 190. On the Call side it is focused at 200 and 210.
Trade Idea 1: Buy the November 195/190-185 1×2 Put Spread for a $1 credit.
Trade Idea 2: Buy the November 195/200 Call Spread and sell the November 180 Put for $0.30.
Trade Idea 3: Sell the November 180/210 Strangle for a $4.00 credit.
#1 gives the downside with a possible entry at 180. #2 gives the upside also with possible entry at 180. #3 is profitable on a close from 176 to 214 at Expiry. I prefer #1 or #3.
If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.blog comments powered by Disqus
Gregory W. Harmon CMT, CFA, has traded since 1986 and held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
- Premium Earnings 2-22-17: Cheesecake Factory and HP
- Momentum Points to Sector Rotation toward the Russell 2000
- Premium Earnings 2-21-17: TJX
- 4 Trade Ideas in Goldman Sachs: Bonus Idea
- 5 Trade Ideas for Tuesday: Commerce Bancshares, Cirrus Logic, McCormick, Ulta Beauty and Union Pacific
- Top Trade Ideas for the Week of February 21, 2017: The Rest Premium
- Top Trade Ideas for the Week of February 21, 2017: The Best
- SPY Trends and Influencers February 18, 2017
- Macro Week in Review/Preview February 17, 2017
- How This Week’s Top 10 Performed, February 17, 2017
Dragonfly Capital Updates