Earnings Season is Starting to Peak this Week. Here is the earnings playbook for CREE, YHOO, CMG, VMW.
$CREE - To Cree or Not To Cree
Expected Move $2.96 ( Range ~$32 - $38)
The $30 support is flashing, will this report send it back to $30 or is the stock ready to launch back over $40? 17% 12% 22% 16% .
6 of the last 10 reports have sent $CREE up or down over 10%. The market is telling you its not moving more than 9%. I think this is a stock to play both ways via a strangle. I will be looking to enter the:
$37 weekly calls for $.80
$33 weekly puts for $.75
That's the great thing about trading stock options. You don't have to be right about the direction, just the size of the move. With this strategy I need $CREE to move at least 13% to post a profit.
A quick hypothetical chart buying these options at the ask shows a break even at $31.50 and $38.61. The cost of going both ways cuts into profit, but also gives you exposure to a stock that has moved sharply in the past both up and down.
$YHOO - Yahhhhhhoooooooooooooo
Expected Move: $1.60 (range $43.05 - $46.25)
It's the chart that has me looking to go long here into tomorrow's earnings report. 6 of the last 7 reports have seen the stock move $1.45 or better. I am trading for the stock to head over $46 tomorrow and will do so via the $45 calls.
My trade for tomorrow:
$45 calls at $.75
$VMW - VM....Where?
Expected Move: $5.00 (range 79.27 - 89.27)
2 year chart
Commentary: $VMW has fallen each of the last 5 earnings reports. Could this be the one that breaks the streak? The stock sits right under long term support/resistance. Just like this market, where you want to be trading with the trend, the earnings trade for $VMW is saying its going down. The chart is showing overhead resistance. I the odds still lie with a move to the downside.
Trade I am looking to make:
$VMW $80 puts for $1.00
Finally - The Burrito
Expected Move: $40 (range $646.93 - $726.93)
The $750 calls are $3 and the $620 puts are $3. You would need an over $60 move in each case for those to bring home the bacon. That is too rich for my blood. The money was made trading $CMG two Fridays ago when the calls where up as much as 44,000%. The chart continues to trend higher, but the stock is due for a 2012 type pull back, which makes it more difficult to pick a direction for the report.
Don't get me wrong, I think $CMG will make a $30-$50 move tomorrow after its report. The money will likely be made on Wednesday when the stock reverses or continues its earnings report move.
Let's look at those two has hypothetical trades $750 calls and $620 puts.