3 Earnings Plays for This Week

The next earnings season is right around the corner. I’ll be looking at hundreds of potential trades, whittling them down to just a handful. Being so picky paid off last quarter when I posted an 87% winning percentage for an average profit of 8.4% across all trades. 3 Earnings Plays for This Week [By Jon Lewis] By Jon Lewis Wednesday, September 21, 2022 [Tesla Reveals Secret Master Plan:]( Tesla’s founder is just days away from revealing his CONFIDENTIAL Master Plan 3.0. You could’ve earned 1,766% - 24,017% profits investing after he released Master Plan Part 1 & 2. Now it’s time for you to BUY these 5 stocks – before Elon reveals everything. [Click here for details.]( Though the “traditional” earnings season ended more than a month ago, that doesn’t mean the cupboard is completely bare. In fact, this week has a few juicy names that have potential for earnings plays. What constitutes “juicy”? Well, my criteria might not be what you think. Frankly, I don’t care about the company itself – what they make, what analysts expect from their earnings report, the so-called “whisper numbers” … that’s just a bunch of noise to me. I look at the characteristics of the stock and its options. What is the stock price? How liquid are the options, i.e., how easy will it be to get in and out of a trade at a decent price? How much premium is available? Are there weekly options? How wide are the strike prices? If a stock makes it that far - and most do not – then I’ll construct an options trade based on what the stock typically does after earnings. If I’m getting paid enough to make the trade (again, this is usually not the case), then I’ll probably go ahead with it. I’ll enter the trade right before earnings and exit the next day. In and out in less than a day. Even though the pickings are slim, this is an unusually rich week for option plays. After this week, though, there’s nothing to get excited about until the big banks start entering the earnings confessional in mid-October. Let’s look at what’s on tap for this week and some of the metrics I use to decide whether to pull the trigger on a trade. As it turns out, all report earnings on Thursday: - Costco (COST): reports Thursday, Sep. 22, after the close This is the biggest name of the week, with a market cap north of $220 billion. COST has the most liquid options of any the week’s contenders, which makes it easy to get into and out of trades. Unlike many stocks, COST is not considered a big mover after earnings, which I prefer. Of course, it’s not a tech name, so that helps. Over the past eight quarters, COST’s average move the next day (which is the same as through the end of the week since it always reports after a Thursday close) is just 2.1%. Currently, COST options are pricing in a move of 4.5% through the end of the week. But keep in mind that includes three full days of trading before earnings. Nevertheless, it’s encouraging that options appear – at least at this point – to be pricing in a bigger move than COST historically has. Only once in the past eight quarters has COST moved more than 4.5% after earnings (6.6% in December 2021). I’ll have a better sense of where COST stands on Thursday, but for now, it looks very attractive and is my #1 potential earnings play. For those who prefer directional plays (I don’t try to predict direction, so my trading aims to be neutral), the recent data show a slight bullish bias of 0.8% on average in the day after the past eight earnings reports. However, the stock has been up four times and down four times, so good luck picking a direction. - Accenture (ACN): reports Thursday, Sep. 22, before the open The Dublin-based infotech company has decent option liquidity, though not nearly as good as COST. ACN tends to be a little more volatile than COST, averaging a 3.5% move the day after earnings. Options are pricing in a move just north of 5% through week’s end. While that sounds like an ample amount, ACN has posted daily post-earnings moves of 6.7%, 6.9% and 7% in the past eight quarters. As an option seller, I’m not overly confident that I’m getting paid enough based on recent post-earnings activity. In terms of direction, ACN has closed higher in five of the past eight days following earnings. The average move is +1.3%. - Darden Restaurants (DRI): reports Thursday, Sep. 22, before the open DRI is a departure from my usual pre-earnings setup because it doesn’t have weekly options. Normally, I’ll use options that expire during earnings week. But DRI’s next expiration date is Oct. 21. Liquidity is adequate for this expiration series. DRI’s average one-day move after earnings is 4.3% for the past eight quarters. But the trend is declining, i.e., recent moves have been smaller. In fact, the average for the past four quarters is 3.2%. Options are currently pricing in a 9.3% move through Oct. 21, so it’s hard to square that with the one-day move. The most appealing fact about DRI, however, is that options have overstated the actual move through expiration in nine of the past 10 quarters. So, while DRI likely won’t be one of my typical out-in-a-day trades, it is attractive from a pricing standpoint. Besides, I’m fine with waiting a few days to collect a profit … if the setup is appealing. For the directional crowd, DRI has gained ground in six of the past eight days following earnings. The average move is +2.5%. The Latest Development in [Tesla’s Secret Master Plan 3.0.]( [Go here ASAP for urgent details]( – and top 5 stocks to BUY NOW. The next earnings season is right around the corner. I’ll be looking at hundreds of potential trades, whittling them down to just a handful. Being so picky paid off last quarter when I posted an 87% winning percentage for an average profit of 8.4% across all trades. Trade Wisely, [Jon Lewis] Jon Lewis P.S. "The Next Steve Jobs" [Reveals Shocking Master Plan 3.0]( - He is just days away from revealing his CONFIDENTIAL Master Plan 3.0. [Click here to discover the full story.]( [Visit WyattResearch.com]( [Take a 7 day break from these emails]( [Unsubscribe from these types of emails]( [Manage your email preferences]( [Wyatt Investment Research] Disclaimer & Important Information [Wyatt Investment Research (“WIR”)]( owns and publishes the website WyattResearch.com, other web sites, and, through its subscription services, various investment newsletters, trade alerts, and other investment-related educational materials. Those publications are informational in nature – WIR is not your financial adviser and does not provide any individualized investment advice to you. 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