A couple of interesting names reporting after the close. Here are their release times, earnings estimates and their updated 2 week expected move charts (from OptionsAI technology.) Below I'll discuss a couple of potential trade structures. All times Eastern.
4:05pm - DocuSign - DOCU
Consensus EPS: $0.10 Revenue: $284.00 Mil
4:15 - Broadcom - AVGO
Consensus EPS: $5.14 Revenue: $5.70 Bil
4:15 - Slack - WORK
Consensus EPS: ($0.06) Revenue: $186.54 Mil
4:15 - Gap - GPS
Consensus: ($0.65) Revenue: $2.56 Bil
Yesterday I discussed WORK, the stock is slightly lower but everything else in the post is more or less the same.
Let's look at AVGO. Like everything else in its space the stock has had a wild ride, beginning the year around $320, hitting a low below $170 in March and now nearly back to its highs. The stock is up about $20 just this week.
The expected move for the next 2 weeks gives a bullish consensus right near the stock's all time highs. That is a level that would probably find some sellers so the options market seems to be on point there. For those that are bullish here's what that looks like with a $325 target for June 19th expiration, from OptionsAI technology:
Because we have 10 dollar strikes in AVGO there's not a lot of precision available here. Let's focus on the 310/330 call spread. That has a breakeven of $314.45 in the stock, and therefore it only has a 39% probability of profit. However, if i were to lower the long strike to be in the money, we are able to get the breakeven much closer to where the stock is trading, and increase the probability of profit, lowering the call sale does it even more:
In the case of the 300/330 call spread, we lower the breakeven to about $312.25, when we lower both calls, to a 300/320 call spread the breakeven is $309.90, nearly where the stock is trading now, basically a stock alternative to $220 in the stock, while only risking about $1000, and essentially 50/50 odds. For those looking for defined risk stock alternatives, both of those trades are worth checking out.
For those a little bearish, the bearish consensus of around 290 is certainly realistic but I like the idea of playing small ball when stocks are near big round numbers like $300. Here's what a $300 target in AVGO looks like from OptionsAI technology:
The 320 put shows just how much movement is needed before a single leg option breaks even. The 310/300 put spread is interesting with a breakeven around $305, and the short 310/330 call spread has a breakeven at $316.90 but risks alot to make very little if AVGO were to get past that point, but again, with the prior highs below $330 that's a very interesting trade for those that aren't bullish and are looking to fade this stock.
See a part of OptionsAI technology with your own price target and demo trades in AAPL HERE