Earnings Season Begins Today with New Highs in Banking
Earnings Season Begins Today with New Highs in Banking
Meanwhile, Tesla may offer condor opportunities, and JPMorgan bulls could use a call diagonal spread
Earnings season kicks off tomorrow morning with reports scheduled before the market opens from major financial institutions, including JPMorgan Chase (JPM), Wells Fargo (WFC), Citigroup (C) and BlackRock (BLK).
As usual for earnings announcements, bank stocks tend to see bigger price swings. And that's exactly what we're seeing now with XLF's implied volatility jumping to one of the highest levels among sector exchange-traded funds.
S&P 500 movers—free download
Below you can see the biggest decliners in the S&P 500. The largest is EIX, which has been hit hard by the fires ravaging Los Angeles.
To see more stocks, download the spreadsheet below or via this link here.
SPX Customer Guesses
We provided a bit of a sneak from last week—but here are the results from our contests where we reward the participant(s) with the closest guesses.
We also included the targets from the major banks (aka, "the experts"), which is a median estimate of 6600.
Our contest participants are optimistic, but less so than the experts. We will see how the year ends and who is closest.
Two Trade Ideas
JPM ($244) call diagonal spreads (FEB/JAN17) $4.80 debit
JP Morgan starts the first quarter earnings season before the market opens this morning. The stock has chopped around 230-250 for the last three months. If you think it might bounce back to highs, a call diagonal spread is a cheap way to participate in the upside. Long the 250 call in FEB near highs, and selling the 255 in the weekly for some high theta decay, provides roughly 22 delta and some positive gamma.
TSLA ($414) iron condor (FEB) $4.51 credit
Tesla (TSLA) seems to catch a bid every time it dips below $400. Volatility has continued to stay high and tends to increase into the rips above $400. If you think it might stay around the $400 mark, and maybe have some volatility contraction, an iron condor short the 340/325 put spread and the 500/515 call spread is a delta neutral position with some extra room to the upside because of the skew.
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Michael Rechenthin, Ph.D., (aka “Dr. Data”), managing director of research and development, has 25 years of trading and markets experience. He’s best known for his weekly Cherry Picks newsletter. On Thursdays, he appears on Trades from the Research Team LIVE.
Nick Battista, tastylive director of market intelligence, has a decade of trading experience. He appears Monday-Friday on Options Trading Concepts Live. On Wednesdays, he co-hosts Johnny Trades. @tradernickybat
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