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My analysis on SQ leading up to earningsThe overall market finally pulled back bringing most stocks with it. I expect SQ to trade lower with Feb 2's candle. If we make it down to the 100 day SMA and/or the lower trendline, I will buy more shares. This would require support to fail at the 50 day moving average (SMA or EMA). Play the bounce accordingly as well if we trade down to the 50 day SMA or EMA for shorter term trades. Earnings is on February 27, 2018 after market close. I plan on holding through earnings as SQ is a company I believe in and love their product/business model. I have $46 and $50 strikes covered calls for regular February expiry. If I see significant downside coming, I will buy 3 x $48 16 March 2018 puts to protect my investment. My current Leap Call Diagonal (LCD) spread has a max profit at a share price of $43 for regular February expiry. However, if I see there is significant downside coming, I plan to buy 1 x $40 16 March 2018 put to protect my LCD position.
NYSE:XYZLong
by brianweber
4
THE WEEK AHEAD: SEAS, CTL, SQ, M EARNINGS; TEVA (NON)SEAS announces earnings on 11/7 before market open, with an implied volatility of 71%, which is at the upper end of its range over the previous 52 week period. The November 17th 11 short straddle is paying 1.37 at the mid with a comparable iron fly probably not paying enough to make it worthwhile (less than 1/4 the width of the longs). CTL (implied volatility of 62%; at the top of its 52 week range) announces on 11/8 after market close. The quasi-short straddle or tight short strangle 16/17 in the November 17th expiry pays 1.27 with break evens slightly wide of expected move. As with SEAS, the iron fly doesn't pay enough to be worthwhile ... . SQ also announces on 11/8 after market close. With an implied volatility of 55, it's in the top quarter of its annual range. The November 17th 33/42 short strangle camped out at around the 20 delta strikes yields 1.03 in credit, implying that a defined risk play like an iron condor won't pay one-third the width of the wings, although it may be worth pricing it out closer to earnings. M announces on 11/9 before market open (implied volatility 55, top quarter of range). The November 17th 18/19 tight short strangle/near short straddle pays 1.43 at the mid, with break evens wide of the expected. The November 17th 14/18/19/23 comparable defined risk iron condor/fly play pays 1.86, which is close to 1/4 of the width of the longs, so worth a check shortly before the announcement. TEVA's earnings are in the rear view mirror, but its implied volatility remains elevated here at 65 -- at the upper end of its 52 week range. The December 15th 30 delta strike at 10 pays .30 as a potential short put/acquire/cover play with a cost basis of 9.70 in any acquired shares. For the patient and/or fearful of the possibility that this company's another VRX, going monied covered call out of the box with a share purchase here at 11.40 and a sale of the March 16th 10 call would cost 9.06 to put with a max profit of .94.
C
by NaughtyPines