Premium Earnings 2-2-17: Amgen and Amazon

Two names today that report after the close tonight, Amgen, $AMGN, and Amazon, $AMZN.

Amgen, $AMGN

After a 3 year uptrend, Amgen, $AMGN, entered into a broad consolidation in late 2014. It has been there ever since. The latest move has been a move higher off of the bottom of the consolidation, and it sits at the middle, right at the 200 day SMA. Into earnings it has a RSI holding in the bullish zone, while the MACD is flat but crossed up. There is support lower at 156.50 and 152 followed by 145.50 then 140 and 134. There is resistance at 160 and 164 followed by 168 and 171 then 177. The reaction to the last 6 earnings reports has been a move of about 3.07% on average or $4.90 making for an expected range of 153.50 to 163.25. The at-the money February 3 Expiry Straddles suggest a similar $4.60 move by Expiry with Implied Volatility at 73% above the February at 30%. Short interest is low under 1%. Open interest is big at 145 and then 150 and 152.50 on the Put side. On the Call side it is found from 157.5 to 165 and larger.

Trade Idea 1: Buy the February 3 Expiry 157.5/155-152.5 1×2 Put Spread for $0.20.

Trade Idea 2: Buy the February 3 Expiry 157.5/160/162.5 Call Butterfly for $0.60.

Trade Idea 3: Buy the February 3 Expiry 160/162.5 Call Spread ($1.00) and sell the February 3 Expiry 152.5 Put for a $0.20.

Trade Idea 4: Sell the February 3 Expiry 150/165 Strangle for a $1.00 credit.

#1 gives the downside with leverage and may put you in the stock at 150. #2 and #3 give the upside and #3 may put you in the stock at 152.50. #4 is profitable on a close from 149 to 166 at Expiry. I prefer #1, #3 or #4.

Amazon, $AMZN

Amazon, $AMZN, pulled back from a high at the beginning of October, and settled into a symmetrical triangle consolidation. It broke out of the triangle to the upside at the start of the new year, establishing a target to 863. It has proceeded higher, but recently found resistance at that October high. Into earnings it has a RSI that is in the bullish zone, and a MACD that is rising. There is support lower at 820 and 807 followed by 791 and 776. There is resistance above at 846 then free air. The reaction to the last 6 earnings reports has been a move of about 6.58% on average or $55 making for an expected range of 783 to 893. The at-the money February 3 Expiry Straddles suggest a smaller $41.50 move by Expiry with Implied Volatility at 106% above the February at 36%. Short interest is low at 1.5%. Open interest on the Put side is biggest from 795 to 800 and then spread from 807.50 to 820. On the Call side it is spread from 820 to 900, but generally bigger.

Trade Idea 1: Buy the February 3 Expiry 840/860 Call Spread ($10) and sell the February 3 Expiry 815 Put for free.

Trade Idea 2: Buy the February 3 Expiry 835/815 1×2 Put Spread for free.

Trade Idea 3: Buy the February 3 Expiry/March 880 Call Calendar ($10) and sell the February 3 Expiry 815 Put for free.

Trade Idea 4: Sell the February 3 Expiry 800/900 Strangle for a $7.00 credit.

#1 gives the upside short term while #3 looks longer and both may put you in the stock at 815. #2 gives the downside with leverage and a possible entry at 805. #4 is profitable on a close from 793 to 907 at Expiry. I like all 4. I own stock in personal accounts and will hold through earnings. I also hold Broken wing call butterflys for clients.

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
Dragonfly Caps Blog