Premium Earnings 8-8-14: Priceline and Sysco

• Posted by Greg Harmon
• on August 8th, 2014

Two names today that report before the open Monday, Priceline.com, $PCLN, and Sysco, $SYY.

Priceline.com, $PCLN

Priceline.com, $PCLN, had a long pullback and base from the March highs to the turnaround in May. The recent base had given it strength to move higher and it is testing resistance at 1290. as the bull flag breaks higher it will target 1330. The Relative Strength Index (RSI) is rising and in the bullish zone, with a MACD rising. There is support lower at 1267 and 1240 followed by 1225 and 1200. There is resistance higher at 1314 and 1372 before the prior high. The reaction to the last 6 earnings reports has been a move of about 3.30% on average or $49 making for an expected range of 1235 to 1335. The at-the money August Straddles suggest a larger $75 move by Expiry with Implied Volatility at 50% above the September at 33%. Short interest is low near 2%. Open interest favors the 1300 Strike in August with 1350 and 1360 on a move up.

Trade Idea 1: Buy the August 1310/1340 Call Spread for $12.00.

Trade Idea 2: Buy the August 1310/1340 Call Spread and sell the August 1215 Put for free.

Trade Idea 3: Buy the August 1310/1340 Call Spread and sell the August 1240/1210 Put Spread for $4.00.

Trade Idea 4: Sell the August 1290 Straddle for a $75 credit.

#2 or is good if you have margin, and #3 brings in some downside risk but at 1240. Use #1 for a straight upside bet but size accordingly as it is high price. #4 gives a great range.

Sysco, $SYY

Sysco, $SYY, has been in a long consolidation since December. Last week it pulled back to the 200 day SMA and bounced higher Thursday. The RSI is rising again and the MACD is turning up towards a cross up. Support lower comes at 35.50 and 35.10 followed by 34.40. Resistance higher may come at 36.50 and 36.75 before 37.10 and 37.80. The reaction to the last 6 earnings reports has been a move of about 3.0% on average or $1.10 making for an expected range of 35.15 to 37.40. The at-the money August weekly Straddles suggest a larger $1.50 move by Expiry Friday with Implied Volatility at 36% above the September at 22%. Short interest is moderate at 5%. There were buyers of the August 36 and 37 Calls yesterday. Open interest favors a pin at the 37 strike next week.

Trade Idea 1: Buy the August 36/37 1×2 Call Spreads for $0.15.

Trade Idea 2: Buy the August 36/38 Call Spreads for $0.75.

Trade Idea 3: Buy the August 36/37/38 Call Butterfly for 35 cents.

Trade Idea 4: Buy the August/September 37 Call Calendar for 50 cents.

I like #1 or #3 for the short term upside.

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