Trading the Biggest Week of Earnings Season
Mark’s Watchlist
Welcome to earnings season’s biggest week.
We’re going to see reports from big tech and big energy this week – and I’ve got the most important names on my Watchlist today.
- Facebook Inc. (Nasdaq:FB)
Last week, I recommended selling puts on Snap Inc. (NYSE:SNAP) after the social media stock got crushed on poor earnings.
And this week, it’s FB’s turn.
FB reports earnings after the bell today. And despite its regulatory issues, FB has got long-term value, especially when you consider its ownership of Instagram. If it gets low enough, this is a stock you want to get long.
The market is pricing in a $21-$22 move on FB after earnings. That’s about 7%, and I think we could see some fireworks in the stock. I’m watching this one closely for a potential post-earnings play tomorrow.
- Apple Inc. (Nasdaq:AAPL)
Speaking of post-earnings plays: AAPL.
AAPL reports after the close on Thursday. We’ve been putting on some quick, Friday to Monday plays on AAPL in the Profit Revolution – but I wouldn’t recommend holding anything through AAPL’s report.
Stay away on earnings… but come back after.
Traders absolutely slam AAPL option prices after earnings. They get way too cheap, providing some great trade opportunities to buy low and sell high.
I’m going to watch AAPL for a potential Friday to Monday trade after Thursday’s report – and I’ve got a feeling my Profit Revolution members will get an earful of possible trades.
If AAPL produces post-earnings plays like I expect it to, you’ll want to be in the Profit Revolution room.
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- Fifth-Third Bancorp (Nasdaq:FITB)
As far as I’m concerned, FITB is as mega as the mid-cap banks get. This is an acquirer, not an “acquiree.” And like the rest of the financial industry, it’s had a good year:
I like this name to continue on its path higher. And the November 19 $46 calls are only a buck for a cheap way to play that continued jump.
- Exxon Mobil Corp. (NYSE:XOM)
This was always the biggest week of earnings season – even before there were companies like Apple, Amazon, and Facebook.
Before big tech, XOM and Chevron Corp. (NYSE:CVX) were the biggest companies in the market. And they both report at the end of this week on the 29th.
I’m looking at a great asymmetrical trade on XOM right now. That’s a low-risk, high reward play – and this one pays out by Friday.
The October 29 $64 calls are a great bet on XOM making a relatively small move this earnings season.
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Today’s Impact Money Trade
Speaking of selling puts on SNAP – this big money buyer is going long on the social media stock:
Click To Enlarge
They bought 9,388 of the October 29 $55 calls for 1.95 each – that’s a $1.8 million bullish bet.
Now, I don’t disagree. SNAP is way oversold after last week’s earnings report:
SNAP shouldn’t be this cheap – so, would I piggyback this one?
This is an interesting play, that’s for sure. And I’m not totally out on it.
But it’s important to keep a diverse portfolio – that’s trades from a variety of sectors. When it comes to big tech, I think there are better options out there.
Frankly, I’m interested in seeing what FB does this afternoon before I dump a bunch of money into SNAP.
So, I’m not piggybacking this one quite yet. But it’s definitely on my radar.
VIX Traffic Light
My VIX light isn’t just red – it’s blaring red.
Fund managers, big institutions – they’re starting to get lazy. They’ve been wasting money on put protection for months while the market continues going up. So they’re not buying those crash protection puts anymore…
And volatility can finally go down.
But how low can it go?
As good tech earnings come out this week, I can see the VIX going to 13 or lower. We’re in an incredibly steep contango, and it’s putting a drag on UVXY and VXX as downside pressure mounts on futures.
We’re looking at a long-term downtrend in the next couple of months for the VIX.
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Mark Sebastian
Founder, Profit Takeover
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October 25 2021
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