Premium Earnings 3-28-18: PVH and Constellation Brands

• Posted by Greg Harmon
• on March 28th, 2018

Two names today, one that reports after the close tonight, PVH, $PVH, and one before the open Thursday, Constellation Brands, $STZ.

PVH, $PVH

PVH, $PVH, moved higher through short term resistance at the start of the year. It continued to a top at the end of January. Since then it is been consolidating in a descending triangle. Into the report it is pressing into the apex of the triangle and against resistance with the RSI rising toward the bullish zone and the MACD moving up. There is support lower at 142.65 and 139.75 then 138.50 and 135 before 131.50. There is resistance at 146 and 152 then 156. The reaction to the last 6 earnings reports has been a move of about 4.02% on average or $5.85 making for an expected range of 138.75 to 150.50. The at-the money April Straddles suggest a larger $10.50 move by Expiry with Implied Volatility at 37% above the May at 28%. Short interest is low at 1.4%. Open interest is biggest at 130 and 140 on the Put side. On the Call side it is biggest at 160 then 150.

Trade Idea 1: Buy the April 140/135 1×2 Put Spread for free.

Trade Idea 2: Buy the April 145/150 Call Spread ($2.90) and sell the April 130 Put for $1.90.

Trade Idea 3: Buy the April/May 155 Call Calendar ($1.90) and sell the April 130 Put for 85 cents.

Trade Idea 4: Sell the April 130/160 Strangle for a $1.55 credit.

#1 gives the downside with leverage and a possible entry at 135. #2 and #3 give the upside using leverage and may put you in the stock at 130. #4 is profitable on a close between 128.45 and 161.55 at Expiry. I prefer #1 or #4.

Constellation Brands, $STZ

Constellation Brands, $STZ, rose throughout 2017, ending the year at all-time highs. It gapped down in January and then continued lower. Since that bottom at the beginning of February it has held in a rising channel. Into earnings it is at the bottom of the channel with the RSI holding at the lower edge of the bullish zone and the MACD falling but still positive. There is support lower at 217 and 213 then 209 and 205 with a gap to fill to 202.25. There is resistance above at 223.50 and 229.25 then 230.50. The reaction to the last 6 earnings reports has been a move of about 4.47% on average or $9.80 making for an expected range of 209 to 228.75. The at-the money March 29 Expiry Straddles suggest a similar $9.55 move by Expiry with Implied Volatility at 90% above the April at 28%. Short interest is low at 1.7%. Open interest is focused at 210 below at on the Put side then at 215 and 222.50. On the Call side it is biggest at 222.50.

Trade Idea 1: Buy the March 29 Expiry 217.50/212.50 1×2 Put Spread for free.

Trade Idea 2: Buy the March 29 Expiry/April 230 Call Calendar ($1.40) and sell the March 29 Expiry 207.50 Put for 45 cents.

Trade Idea 3: Buy the March 29 Expiry 220/222.50 Call Spread ($1.40) and sell the March 29 Expiry 207.50 Put for 45 cents.

Trade Idea 4: Sell the March 29 Expiry 207.50/230 Strangle for a $1.90 credit.

#1 gives the downside with leverage and a possible entry at 212.50. #2 and #3 give the upside using leverage and may put you in the stock at 207.50. #4 is profitable on a close from 205.60 and 231.90 at Expiry. I prefer #2 or #4.

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.

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