Trade Alert: Earnings, 5/30/2024
Heads we make 200% tomorrow, tails we lose 100%
A Quick Earnings Trade Post
Typing fast so you have time to place this trade yourself if you’re interested.
We’ve got an AI-related company reporting after the close today. The stock is down a few percent today. The options market estimates a move of about 12% in either direction. Zacks ESP and Estimize predict it will beat earnings, and Portfolio Armor’s gauge of options market sentiment is bullish.
Our earnings trade will make about 200% if this stock closes over about 7.5% higher tomorrow. If not, it will probably expire worthless, so only allocate as much to this as you would be comfortable losing.
Details below.
The Trade
The company is Dell (DELL 0.00%↑), and our trade is a vertical spread expiring on May 31st, buying the $182.50 strike calls and selling the $185 strike calls for a net debit of $0.80. The max gain on 4 contracts is $680, the max loss is $320, and the break even is with DELL at $183.20. This trade filled at $0.80.
Exiting This Trade
I’m going to set a GTC order to exit at somewhere between $2.25 and $2.50 and lower that price if necessary as we approach expiration.
DELL just reported a beat on the top and bottom lines (EPS was exactly what Zacks' most accurate analyst predicted, $1.27), but it looks like that wasn't enough. The stock's getting demolished after hours, down 13% now.