Who I’m watching this Earnings Season

Earnings season started this week with a bang, with bank stocks including JPMorgan (JPM) and Citigroup ©, announcing positive results that sent the market trading higher. Next, came a few transportation stocks and the first of the Nasdaq 100 components (NDX) — Netflix (NFLX). 

Next week, is when the real volatility will kick up, as the earnings calendar continues to fill up.

What are some key reports I’ll be watching and possibly trading?

Here’s a list for next week…

Monday, Oct 21st:

  • PetMed Express, Inc. (PETS) – high short interest

Tuesday, Oct 22nd:

  • Lockheed Martin Corp. (LMT)
  • Mcdonalds Corp. (MCD)
  • Procter & Gamble Co. (PG)
  • United Technologies Corp. (UTX)
  • PulteGroup, Inc (PHM)
  • Chipotle Mexican Grill Inc (CMG)
  • Skechers U.S.A. Inc. (SKX)
  • Texas Instruments, Inc. (TXN)

Wednesday, Oct. 23rd:

  • Boeing (BA)
  • Caterpillar, Inc. (CAT)
  • Waste Management (WM)
  • Tesla, Inc (TSLA)
  • Microsoft Corp. (MSFT)
  • Paypal (PYPL)
  • Lam Research Corp. (LRCX)
  • O’Reilly Automotive, Inc (ORLY)

Thursday, Oct. 24th:

  • Twitter, Inc. (TWTR)
  • 3M Company (MMM)
  • Northrop Grumman Corp. (NOC)
  • Raytheon Co. (RTN)
  • Amazon.com, Inc. (AMZN)
  • Visa Inc. (V)
  • Intel Corp. (INTC)

Friday, Oct. 25th:

  • Verizon Communications (VZ)

Why does this matter?

Knowledge of corporate earnings — and what to do during this time frame — is critical for traders for a few reasons….

  1. Earnings give companies the opportunity to put on display their growth. Quarter over quarter, and year over year growth, is displayed. Along with discussing their forward projections via their guidance. 
  2. Earnings are a catalyst that impact the direction and movement of the overall stock market and can cause serious volatility. 
  3. Earnings provides a trading opportunity in the options world. If you know me, you know I love to trade direction in the stock market. I rarely trade sideways movement. I like to trade earnings in three separate ways. I trade the momentum higher going into a report (the Run into Earnings), the actual report (I just call these earnings trades), and then price movement after the report (2x moves). 

Let’s talk about the third one — watching for a 2x move. 

One of my favorite options trades is to watch for companies that have blown out reports, and move about 1.5-2x what the market maker expected move was. In these instances, oftentimes, you can trade this ticker the next day, to follow along with the momentum.

This is especially the case when you have high short interest.

ROKU: A Case Study

To catch these, the easiest thing to do is either use a watch list or a scan. While doing this look for stocks that are moving more than 3% after hours. Then, you must compare the actual move to the expected move. If you have a greater than expected move on your hands, this can often lead to a nice momentum play.

What about you? What are you looking for this earnings season? Let me know below!

2 thoughts on “Who I’m watching this Earnings Season”

  1. Excellent synopsis of the earnings outline and trade opportunities. Further, you may elaborate the pros and cons of different earnings option trades; such as: iron b-fly, call & put b-flies, ratio back-spreads, diagonals, etc.

    Reply

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