Banking

Option Market Expected Moves For Key Earnings Reports This Week

Last week we looked at bank earnings and a JPMorgan Bull Put Spread based on the expected range. The JPMorgan idea worked well, with the put spread expiring worthless.




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Earnings season heats up this week with some crucial names reporting. 

As a reminder, to calculate the expected range, look up the option chain and add together the price of the at-the-money put option and the at-the-money call option. Use the first expiry date after the earnings date. 

While this approach is not as accurate as a detailed calculation, it does serve as a reasonably accurate estimate. 

Let’s a look at some of this week’s big names and the expected range according to the options market: 

Monday

IBM (IBM) expected range 4.6% 

Tuesday

Ally Financial (ALLY) expected range 8.2% 

Netflix (NFLX) 6.6% 

Haliburton (HAL) 6.0% 

United Airlines (UAL) 5.7% 

Chipotle Mexican Grill (CMG) 4.5% 

Intuitive Surgical (ISRG) 4.5% 

Wednesday

Coca-Cola (KO) 2.5% 

Johnson & Johnson (JNJ) 2.4% 

Verizon (VZ) 2.0% 

Thursday

Cleveland-Cliffs (CLF) 10.9% 

AT&T (T) 2.9% 

American Airlines (AAL) 6.5% 

Freeport-McMoRan (FCX) 5.9% 

Intel (INTC) 6.2% 

Snap (SNAP) 12.4% 

Twitter (TWTR) 11.0% 

Friday

American Express (AXP) 3.6% 

Schlumberger (SLB) 5.5% 

Honeywell (HON) 2.8% 

Kimberly Clark (KMB) 3.2% 

Option traders can use these expected move to structure trades. Bearish traders can look at selling bear call spreads outside the expected range. 

Bullish traders can sell bull put spreads outside the expected range. 

Please remember that options are risky, and investors can lose 100% of their investment.

This article is for education purposes only and not a trade recommendation. Remember to always do your own due diligence and consult your financial advisor before making any investment decisions. 

Gavin McMaster has a Masters in Applied Finance and Investment. He specializes in income trading using options, is very conservative in his style and believes patience in waiting for the best setTGT is the key to successful trading. Follow him on Twitter at @OptiontradinIQ 

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