American Express Earnings Trade Using Options

• Posted by Greg Harmon
• on July 20th, 2011

American Express (ticker: $AXP) reports earnings Wednesday after the market closes. This sector within Financials has been one of the few bright spots and this name has recently made multi-year highs before pulling back. Take a look at the weekly chart below up to about noon on Wednesday. It shows support at the 50 level dating back from 2006-2007 and the 20 week Simple Moving Average (roughly 100 day) just below at 48.47, which it has been riding higher.

American Express, $AXP Weekly

Now look at the daily chart. This shows the pullback recently and the shorter term support/resistance line just under 48, with the actual 100 day SMA at 47.95 below. It has been trending higher since October. I am comfortable owning American Express on a pullback to 48 given this rising trend, and would like to participate in an earnings surprise to the upside sooner.

Trade Idea: Buy July Strike 52.5 Call and sell short the August 48 Strike Put

As I wrote this piece at 12:20 the combination was quoted at -0.04 bid/ 0.03 offered.

American Express, $AXP Daily

As always you can see details of individual charts and more on my StockTwits feed and on chartly.)

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