EBay, (EBAY) pulled back over the last month, just as it did for the month prior to its last earnings report. As it headed into the report tonight, it has a Relative Strength Index (RSI) that has held in bullish territory on the recent pullback and is moving back up, and a Moving Average Convergence Divergence (MACD) indicator that is negative but improving towards a cross to positive, both supporting an upward bias.
eBay (EBAY)
There is support lower at 47.50 and 46.10 followed by 43.20 to 43.50. Resistance is higher at 49.25 and 50.50. The reaction to the last 6 earnings reports has been a move of about 4.93% on average or $2.40 making for an expected range of 45.90 to 50.70. The at-the money October Straddles suggest a roughly $2.75 move by Expiry with Implied Volatility at 90% above the historical at 25% and November at 37%.
Trade Idea 1: Buy the November 50 Call for $1.37.
Trade Idea 2: Buy the October 48/50 Call Spread for $0.90.
Trade Idea 3: Buy the October/November 50 Call Calendar for $0.70.
Selling the October 50 Call and buying the November 50 Call looking for the October call to expire worthless in 2 days.
Trade Idea 4: Buy the November 45/50 bull Risk Reversal for $0.53.
Selling the November 45 Put and buying the November 50 Call.
Trade Idea 5: Sell the October 46/50 Strangle for a $1.16 credit.
A bet on volatility bleeding out of the October options after the report with protection to a range of 44.84 to 51.16
Disclaimer: The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.
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EBay Earnings Trade Ideas
Published 10/17/2012, 05:29 PM
Updated 05/14/2017, 06:45 AM
EBay Earnings Trade Ideas
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