2013-07-08-Earnings Trade Idea

Posted on July 8th, by Mitchell Warren in Trade Ideas. Comments Off on 2013-07-08-Earnings Trade Idea


Alcoa (AA) Trade Idea

Buy the (AA) July 12 weekly $7.50/$8 Bull Risk Reversal for a $0.09 debit or better

(Buy 1 July 12 weekly $8 Call and sell 1 July 12 weekly $7.50 Put, all in one trade)

Stop loss- None

Upside target- $0.20-$0.25


Notes: If shares of (AA) close below $7.50 on Friday, you will be assigned shares of the stock for $7.50 each (1 contract=100 shares). Since the implied move is around $0.40, it is unlikely that the stock will move below the $7.50 level. Breakeven on this trade is $8.09 with upside likely in the $8.20-$8.25 range. According to EarningsWhispers.com, the whisper number for tonight is $0.08 vs the analysts estimates of $0.063. Revenue exceptations are for $5.8 billion, a year over year decline of 3.33%.

If your primary strategy is the long call, consider just buying the July 12 weekly $8 call for $0.15.

Last 5 returns for the day after an earnings report

Q1 2013- +0.00%

Q4 2012- -0.22%

Q3 2012- -4.65%

Q2 2012- -4.05%

Q1 2012- +3.07%

Comments are closed.

Wordpress SEO Plugin by SEOPressor