With 85% of the tradable stocks reporting earnings over the next four weeks the pickings are slim. For stocks reporting earnings over the next three weeks the August option premiums are priced too high. If we step out in time to September options the prices are even higher.
The Q2 earnings cycle is typically short. The majority of companies cram their reporting dates into a very short period and that is right at the start of the summer doldrums. Companies that report early will become a drag on the market post announcement and that sours sentiment.
I am only recommending one position this week. I scanned earnings dates and charts for several hundred companies and the charts were either vertical or earnings were imminent.
NEW DIRECTIONAL CALL PLAYS
DELL - Dell Technologies - Company Profile
Dell Technologies Inc. designs, develops, manufactures, markets, sells, and supports information technology (IT) products and services worldwide. It operates through three segments: Infrastructure Solutions Group (ISG), Client Solutions Group (CSG), and VMware. The ISG segment provides traditional and next-generation storage solutions; and rack, blade, tower, and hyperscale servers. It also offers networking products and services that help its business customers to transform and modernize their infrastructure, mobilize and enrich end-user experiences, and accelerate business applications and processes; and attached software, and peripherals, as well as support and deployment, configuration, and extended warranty services. The CSG segment offers desktops, notebooks, and workstations; displays and projectors; third-party software and peripherals; and support and deployment, configuration, and extended warranty services. The VMware segment offers compute, cloud management, and networking, as well as security storage, availability, and other end-user computing offerings that provides a flexible digital foundation to enable the digital transformation. The company also offers cloud-native platform that makes software development and IT operations a strategic advantage for customers; information security and cybersecurity solutions; cloud software and infrastructure-as-a-service solutions that enable customers to migrate, run, and manage mission-critical applications in cloud-based IT environments; cloud-based integration services; and financial services. It has a collaboration with Microsoft to deliver a joint Internet of Things (IoT) solution. The company was formerly known as Denali Holding Inc. and changed its name to Dell Technologies Inc. in August 2016. Dell Technologies Inc. was founded in 1984 and is headquartered in Round Rock, Texas. Company description from FinViz.com.
Dell shares crashed at the end of May when they reported weak revenue as a result of the trade war with China. Shares fell from $70 to $50.50 over about three weeks. We have seen multiple tests of that support level and shares are trying to rebound.
While the trade war with China is continuing, the back to school sales which occur in Q2 for Dell should be positive. They do not report earnings until September 5th so we can use an August option to capture about four weeks of market movement.
Dell will react positively to new Nasdaq highs. The options are cheap, so we have decent potential for a rebound and minimal risk.
Buy Aug $55 call, currently $1.85, stop loss $50.00.
NEW DIRECTIONAL PUT PLAYS
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