NaughtyPines

THIS WEEK'S EARNINGS PLAYS VIA OPTIONS -- PCLN, ESRX, DE

NYSE:DE   DEERE & CO
I ground through a large number of next week's earnings announcements, thinking I might find a nugget or two to play via options, but was somewhat disappointed.

I've never played ESRX             before, which announces on Tuesday after market close, probably because I'm not a fan of anything remotely pharmaceutical for these plays beyond the "uber" names like LLY             and AMGN             . Price gyrations can be wilder than the garden variety earnings announcement and ESRX             has been subject to being "Hillaried," a phenom which can occur at any time ... .

Naturally, there's PCLN             , which announces earnings on Wednesday, but the liquidity in the options is horrible, with wide bid/ask spreads which increases the likelihood that you won't get a fill on any setup at a fair price -- at least at the mid. Given the quality of the liquidity, however, it might be worth attempting a fill of a setup a good ways above the mid price and see if it goes ... . If it doesn't fill, pass on a play; it just isn't worth chasing price on an underlying with options as crappy as PCLN's.

DE, which announces on Friday before market open. My guess is that the company's performance -- like other machinery companies with heavy export reliance             (e.g., CAT) -- will continue to flag on Greenback strength, so I may look to skew any setup a tad bearish , particularly since the bounce off of 1/20 low of 70.16 (even though I usually assume a directionally neutral stance on these plays, since it's impossible to gauge market reaction to any particular announcement).

Naturally, there are other earnings announcements that could be played in some other fashion (e.g., trading the underlying directly), but these are the only ones having the hallmarks of good premium selling plays: (1) high implied volatility rank; (2) high implied volatility; (3) option liquidity (with the exception of PCLN             ); and (4) the availability of weeklies.
Khanna
9 months ago
agree..good breakdown. I think DE might be good entry tomorrow (if it goes above $80) for put
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NaughtyPines Khanna
9 months ago
I would tend to agree with that. DE has struggled somewhat on a combination of soft foreign market demand, Greenback strength, and low ag commodity prices. They've been doing some cost-cutting, but I don't know whether that's going to be enough to overcome the downturn in quarterly revenues.
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