Today is an interesting one on the earnings front as we get reports from a couple of high flyers after the close. Let's check in on the set-up for Nvidia, Palo Alto and depending on your view, look for smarter trades
Earnings today and their 2 week expected moves from OptionsAI technology. All times eastern:
SPNK - 4:00pm
PANW - 4:15pm
NVDA - 4:20pm
Ways to Play
As always, one must be cognizant of earnings volatility/expected moves because the value of all options will be lower the following day. A good illustration of that is the charts above. Nearly the entire expected move for the next two weeks in each of these stocks is priced for the event itself (note the wide jumps tomorrow, then the flattening of the curve for the following 13 days).
Let's focus on NVDA. The chart is amazing, bouncing in March and never looking back, now at new all time highs. 2 days ago we featured a defined risk stock alternative that that mimicked stock if it continues higher towards $400 (read here). So let's focus on bearish positioning today as there are several ways to accomplish that. Here is a bearish price target of ~$315 a month out, using OptionsAI technology:
And the trades returned:
The differences between the long put spread and the short call spread are fairly obvious, and depend on whether expects a sharp move lower over the next few weeks (the long put spread) or simply think the rally into the event will lose steam, without as a specific target below (the short call spread).
For those looking to more isolate the event itself, we can look to next Friday's expiration (options can of course be traded for tomorrow's expiration as well) and do the same price target of $315, but with a timeframe several weeks earlier than above, we get some much more aggressive trades, including one entirely outside the expected move:
Note the 330/315 put spread. That trade begins at the expected move, and plays for a move of $15 beyond that bearish consensus. An out of the money trade like that is essentially saying "I'm even more bearish than the bears" and the risk/reward reflects that. As does the low probability of profit.
See a part of OptionsAI technology with your own price target and demo trades in AAPL HERE