Premium Earnings 1-28-19: Corning and Lockheed Martin

• Posted by Greg Harmon
• on January 28th, 2019

Two names today that report before the open Tuesday, Corning, $GLW, and Lockheed Martin, $LMT.

Corning, $GLW

Corning, $GLW , started falling back from a high in September. It broke the 200 day SMA in October and bounced, then came back to the 200 day SMA again and bounced to a lower high. The third time at the 200 day it fell through and continued to a lower low. Since then it has been rising in a wedge that has the 200 day SMA acting as resistance. It has a RSI moving sideways in no man’s land with the MACD trying to move to positive. There is support lower at 29.20 and 28 then 27 and 26.30. There is resistance above at 30.80 and 32.30 before 33.50 and 34.15. The reaction to the last 6 earnings reports has been a move of about 6.42% on average or $1.95 making for an expected range of 28.35 to 32.25 The at-the money February 1 Expiry Straddles suggest a similar $1.95 move by Expiry with Implied Volatility at 74% above the March at 32%. Short interest is low at 1.9%. Open interest is light but biggest at 29 on the Put Side. On the Call side it bigger and found at 30.50 and 31. Today a very large 29.50/27.50 Put Spread traded near the offer against almost no open interest, an opening transaction.

Trade Idea 1: Buy the February 1 Expiry 29.50/28.50-28 1×2 Put Spread for free.

Trade Idea 2: Buy the February 1 Expiry 30.50/31 Call Spread ($0.25) and sell the February 1 Expiry 28 Put for free.

Trade Idea 3: Buy the February 1 Expiry /February 32 Call Calendar ($0.18) and sell the February 1 Expiry 28 Put for a 5 cent credit.

Trade Idea 4: Sell the February 1 Expiry 27.50/32.50 Strangle for a $0.35 credit.

#1 gives the downside with leverage and a possible entry at 28. #2 and #3 give the upside using leverage and may put you in the stock at 28. #4 is profitable on a close between 27.15 and 32.85 at Expiry. I prefer #1 or #4.

Lockheed Martin, $LMT

Lockheed Martin, $LMT, moved up out of consolidation in September, but it was short lived. It reversed lower mid month and continued to a bottom in December over $100 lower. Since then it has moved higher, breaking above falling trend resistance 2 weeks ago. Into the report it is over the 50 day SMA for the first time since it started lower and it has a RSI rising to the edge of the bullish zone with the MACD rising and positive. There is support lower at 282.50 and 278 then 270 and 266 before 257 and 245. There is resistance above at 290 and 303 then 306 and 313.50. The reaction to the last 6 earnings reports has been a move of about 2.33% on average or $6.70 making for an expected range of 280.50 to 294. The at-the money February 1 Expiry Straddles suggest a larger $10.60 move by Expiry with Implied Volatility at 43% above the March at 24%. Short interest is low under 1%. Open interest is light on the Put Side. On the Call side it has some size at 290 and 305.

Trade Idea 1: Buy the February 1 Expiry 282.50/277.50-275 1×2 Put Spread for free.

Trade Idea 2: Buy the February 1 Expiry 287.50/290 Call Spread ($1.50) and sell the February 1 Expiry 275 Put for a 10 cent credit.

Trade Idea 3: Buy the February 1 Expiry /February 300 Call Calendar ($1.70) and sell the February 1 Expiry 275 Put for $0.15.

Trade Idea 4: Sell the February 1 Expiry 270/300 Strangle for a $2.00 credit.

#1 gives the downside with leverage and a possible entry at 275. #2 and #3 give the upside using leverage and may put you in the stock at 275. #4 is profitable on a close between 268 and 302 at Expiry. I prefer #3 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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