- Blackrock reports Q2 earnings tomorrow before the open.
- Expected move for tomorrow's expiration is ~3% vs the expected move for the next month of ~6.7%.
- The last earnings in April the stock closed higher by 3.5% and was up as much as 4.5% intraday.
Here's the 1 month expected move chart with tomorrow's expiration expected move highlighted, via Options AI technology:
Ways to Play
The expected move on earnings is small and extremely binary, coming on the day of expiration. For those looking to pick a direction, even if neutral, I think it makes sense to look farther out.
Bullish - The 1 month expected move would put the stock just above $600. That's a sensible target for those looking for the market to make new highs. Here's a look at several bullish trades to 605, including a short put spread, and a long call spread:
The stock is trading $567 and the +570/-610 call spread costs 14.10, for a breakeven of $584.10 in the stock. To get the breakeven a little closer to where the stock is trading, you can see (above) an adjustment to the +560/-610 spread. It's 50 wide, costs ~20.20 and a breakeven of $580.20, so not drastically different on breakeven and does have more overall risk. But a slightly higher probability.
Bearish - If BLK goes lower over the next month it could easily be part of an overall market pullback, which could have some legs. For those looking to position short it may make sense to be aggressive and look for a pullback all the way towards $500 in the stock. Here's a target to that area:
The two trades, the +570/-500 put spread and the +530/-500 put spread are quite different with very different risk profiles. The 570 spread breaks even at about 550 in the stock. The 530 not til below $525 in the stock, long way away and below the expected move being priced at this volatility.