We've heard some feedback from members that you'd like more action... more to look at from Likefolio, especially during earnings season. So today I thought I'd share with you a quick look into the earnings analysis that we've been doing here today. Usually this stuff is only available through our Earnings System but I wanted to share a taste here with you because I think it helps you understand where I'm coming from.
Please note -- none of these are official Opportunity Alerts ... those are typically reserved for trade opportunities that we see over a longer time frame of 2-8 months.
ROKU -- INSIDE OF ANDY'S MIND GETTING INTO A TRADE!
Likefolio PI shows a 40% increase YOY... which lines up to $140m revenue.. which is at low end of expectations. Add onto that LF PI showing a dip from Q1 to Q2 -- while analysts expect an increase... and I'm thinking it's a decent bet that they disappoint slightly.
And when I say decent bet, I am talking about a 55-60% chance. Small edge. I'll take it if I can limit my risk.
So here's what I'm going to do. I'm going to buy a put spread.
Here's the trade I'm putting into thinkorswim (if you don't have thinkorswim, please email me right away!)
BUY +1 VERTICAL ROKU 100 (Weeklys) 10 AUG 18 43/41 PUT @.65 LMT [TO OPEN/TO OPEN]
I'm going to BUY the 43 puts and sell the 41 puts for a total price of 0.65 or better.
This means I will LOSE $65/contract if ROKU is above $43 at the close on Friday, and PROFIT $135 if ROKU is below $41 on Friday.
I'm comfortable with this trade for these reasons:
1. I think there is a 55-60% chance ROKU does not beat analyst expectations. Great, growing company, but analysts are expecting slightly more than I'm seeing in LikeFolio data for the quarter. Not super-convincing but it's an edge.
2. I'm only risking $65. Literally that's all I can lose by using this vertical spread strategy. With a max profit of $135 and a max loss of less than a steak dinner, it's a fun way to trade an interesting stock for me.
3. The market maker move suggests that ROKU is expected to move $6.80 in either direction. If that happens to be down (which I think there is a 55-60% chance of), that would take it to $40/share -- max profit range. If it's up, I lose my $65 and move on.
So that's it... now I've got action tonight where I have a small edge and clearly defined risk. Would I bet my house or my reputation that ROKU misses earnings badly? No! But I will bet 65 bucks that they don't beat. We'll see.
YELP -- the opposite story of ROKU
Stock is under pressure but LikeFolio Purchase Intent mentions have gotten a nice little pop over the last few months.
So again -- small edge that I'll take. Going with a bullish play on YELP. Not sure yet what I'll do, but probably either sell a put spread under the market (betting YELP simply doesn't go down), but may add an out of the money call option for a "lotto" play.
Again... I doubt I risk more than $100 on this trade tonight but I like taking lots of small shots where I have a small edge.
REV -- trouble?
Our Earnings Trading System has been right on this stock 72% of the time with an average gain of 3.4% per earnings trade.
It's suggesting REV bearish. The stock is dropping but we're seeing Purchase Intent dropping faster year over year and quarter over quarter.
Not sure what I'll do on this one.... may just short the stock or buy some in the money puts.
Those are three plays I'm seriously considering. They are NOT worthy of an Opportunity Alert because there just isn't enough conviction in the data to justify a trade that could be held for months. But if you're a really active trader like me, you still want the action.
ALSO-- our last opportunity alert on ETSY got everything wrong. They beat on revenues and earnings. That was the opposite of what LikeFolio data told us would happen. That happens sometimes!
But... the stock is almost back down to entry and I feel really comfortable with our bearish position for now.
Please let me know if you like these "more action earnings ideas" ... we are always striving to improve our product, your experience, and everyone's bottom line!
Good luck to all of us!
2527 Nelson Miller Pkwy #206
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