NaughtyPines

NEXT WEEK'S EARNINGS PLAYS: HD, WMT, CRM, GMCR, TGT

NYSE:HD   HOME DEPOT INC (THE)
With this week's "meaningful" earnings plays (and by "meaningful," I mean worth more than 1.00 credit) all but over, I'm looking into what could be productive for next week, and they are HD             , WMT             , CRM             , GMCR             , and TGT             . While you naturally can play some of the earnings for issues that are valued less than $50, you'll find that the vast majority of the time you're picking up pennies off the sidewalk for those plays, particularly after you get done handing over fees and commissions to your broker. That being said, I always check out sub-$50 instruments with particularly high IVR/IV just in case I can get something decent; all those little plays, after all, do add up.

Unfortunately, some of these are not shaping up to be particularly attractive to play pre-earnings due to <50 IVR             and IV, so you'll just have to watch them to see if there is a sufficient volatility pop to make them worthwhile.

For example, HD             (currently priced at $125 and change) only has an IVR             of 37 and an IV of 24; it's not been the most volatile thing on the block historically speaking, but if I'm going to be picky about these plays, I'm going to want to see IVR             at 50+ to play it pre-earnings. I emphasize "pre-earnings" because the other thing to keep in mind is that sometimes the underlying is not particularly volatile pre-, but increases dramatically post-, such that a post-earnings play becomes more attractive than the pre-earnings one was from a premium selling perspective. In other words, you don't necessarily want to ignore certain underlyings just because their earnings have passed.
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