Throwing Ideas for Earnings

Several companies are releasing earnings tonight and tomorrow.  We can't play them as we have to also monitor the number of open positions in the model portfolio.  So, here are a bunch of thoughts on different earnings.  If you like anything, go for it.   

CMG - Love the name and growth.  I think there is still considerable upside left.  Given 25% run since last quarter and gauging the sentiment from the option market for last few days, I think the straddle is overpriced and the stock stays mostly sideways.  The straddle, however, is pricing in roughly $10 move in either direction.  May/June 120/130 double calendar can be done for $2.20 debit.  Note that company has beat expectations by average of 27% last four quarters.  

ADS - In this case, I expect a large move because of two reasons.  One, short float is 30%.  Either shorts are going to win big time or lose their shirt.  Two, there is a beautiful converging triangle in play as the stock is testing the third time to take out previous 52-week high of just under $70.  Given the short float and technical picture, how about going long May 60/65/70/75 iron condor for $2.00 debit?  The stock will need to make a 6% move in either direction by May expiration to produce a profit.  

CTXS - There was bullish activity leading up to day and thats why May $50 call open interest has swelled to nearly 4,000.  Traders want to get long here.  But earlier today, a large buyer showed up at May $45 puts on the offer.  This buyer could be protecting long equity.  A really cheap shot is to buy May/June $55 call calendar spread for only $0.25 debit.  Thats if you want to side with the buyers.  Remember, Goldman Sachs had CTXS until earlier this year on Conviction Buy list before they dropped it to just Buy (don't ask me what is the difference).  The trade provides nearly 6-to-1 reward if shares rally to $55 by May expiration.  

EQIX - Noted large bullish risk reversal trade earlier in Market Digest commentary thread.  Overall, I show 82% calls bought offer side and 88% puts hitting the bids.  We played this name last earnings season through bullish calendar spread and made decent chunk of money.  Given the bullish activity, a cheap bet is to buy May/June $105 calendar for $0.65.  

SNDK - I am very bullish in this name and is Cramer after they raised guidance a month ago.  Since then the stock has taken off up about 30%.  On and off, bullish bets on the upside continue.  But today, the largest trade was a buyer of 2000 May $37 puts.  This buyer could be protecting long equity given the run the stock has already made.  Still I expect very good numbers.  May/June $39 calendar can be done for $0.62.  

QCOM - Earlier today, someone shorted a monster 1.15 million shares at $42.42 and simultaneously bought 19,900 protective May $42 calls.  This trade alone makes me think the stock is likely have to a negative reaction after earnings.  A simple bet would be to buy May 42/40 put vertical for $0.60.  




Good luck!