Premium Earnings 11-20-19: Nuance Communications and Macy’s

Two names today, one that reports after the close tonight, Nuace Communications, $NUAN, and one that report before the open Thursday, Macy’s, $M.

Nuance Communications, $NUAN

Nuance Communications, $NUAN, had spent 2019 in a flat consolidation, outside of two quick failed breakdowns, until pushing higher in October. This continues a trend higher since late September. Into the report it has a RSI in the bullish zone with the MACD turning rolling to cross down but positive. There is support lower at 16.30 and 16 then 15.75 and 15.35 before 15 and 14.50 then the bottom of the prior range at 13.95. There is resistance above at 16.85 and 17.25 then 17.75 and 18.60 before 19.10 and 20.25. The reaction to the last 6 earnings reports has been a move of about 5.38% on average or $0.90 making for an expected range of 15.60 to 17.40. The at-the money December Straddles suggest a larger $1.60 move by Expiry with Implied Volatility at 40% above the January at 31%. Short interest is moderate at 3.3%. Open interest is biggest from 15 to 16 on the Put Side. On the Call side it is much bigger and focused at 17.

Trade Idea 1: Buy the December 16/15 1×2 Put Spread for 10 cents.

Trade Idea 2: Buy the December 16/17 Call Spread ($0.50) and sell the December 15 Put for 30 cents.

Trade Idea 3: Buy the December/January 17 Call Calendar ($0.20) and sell the December 15 Put for free.

Trade Idea 4: Sell the December 15/18 Strangle for a $0.40 credit.

#1 gives the downside with leverage and a possible entry at 15. #2 and #3 give the upside using leverage and may put you in the stock at 15. #4 is profitable on a close between 14.60 and 18.40 at Expiry. I prefer #3 or #4.

Macy’s, $M

Macy’s, $M, stared moving lower in August 2018 and eventually found a bottom in August this year. This was a 113% retracement of the prior leg up and it has consolidated there since. Into the report it has a RSI dropping sharply from the bullish zone with the MACD turning to cross down but positive. There is support lower at 14.30 and 13.60 then 12 and 11.20 before 10.50, all from 2009. There is resistance above at 16.90 and 17.70 then a gap to fill to 19 and 20.40 above that. The reaction to the last 6 earnings reports has been a move of about 8.2% on average or $1.25 making for an expected range of 13.80 to 16.50. The at-the money November 22 Expiry Straddles suggest a larger $1.70 move by Expiry with Implied Volatility at 155% above the December at 69%. Short interest is high at 27.1%. Open interest is focused at 17 and 15 on the Put Side. On the Call side it builds from 15 to 17 then tails, but is much smaller.

Trade Idea 1: Buy the November 15/14 1×2 Put Spread for 5 cents.

Trade Idea 2: Buy the November 22 Expiry 15.50/17 Call Spread ($0.45) and sell the November 22 Expiry 13.50 Put for $0.20.

Trade Idea 3: Buy the November 22 Expiry/December 17 Call Calendar ($0.25) and sell the November 22 Expiry 13.50 Put for free.

Trade Idea 4: Sell the November 22 Expiry 13/17.50 Strangle for a $0.30 credit.

#1 gives the downside with leverage and a possible entry at 14. #2 and #3 give the upside using leverage and may put you in the stock at 13.50. #4 is profitable on a close between 12.70 and 17.80 at Expiry. I prefer #3 or #4.

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