Overview:
The earnings outlook for the S&P 500 for the third quarter is less negative relative to recent quarters. The percentage of companies issuing negative earnings guidance is equal to the 10-year average. Overall, the index is expected to report a year-over-year decline in earnings in the third quarter for the fourth straight quarter. However, the estimated decrease in earnings for the third quarter would be the smallest decline during this four-quarter streak.
Overall, the S&P 500 is expected to report a (year-over-year) decline in earnings of -0.3% for the third quarter. If -0.3% is the actual decline for the quarter, it will mark the fourth straight quarter that the index has reported a decline in earnings.
However, it will also mark the smallest (year-over-year) decrease in earnings during this streak.
Eight of the eleven sectors are projected to report year-over-year earnings growth, led by the Communication Services and Consumer Discretionary sectors. On the other hand, three sectors are predicted to report a year-over-year decline in earnings, led by the Energy and Materials sectors.
In terms of revenues, the S&P 500 is expected to report (year-over-year) revenue growth of 1.7%. If 1.7% is the actual revenue growth rate for the quarter, it will mark the 11th consecutive quarter of revenue growth for the index.
Nine sectors are projected to report year-over-year growth in revenues, led by the Consumer Discretionary sector. On the other hand, two sectors are predicted to report a year-over-year decline in revenues: Energy and Materials.
During the upcoming week, 12 S&P 500 companies (including three Dow 30 components) are scheduled to report results for the third quarter.
$Netflix(NFLX)$
Netflix is scheduled to report earnings on 18-Oct-2023. The last time Netflix reported earnings on 25-Jul-2023, the stock decreased by 9.7%.
As you can see from the table below, NFLX shares have moved lower in the immediate aftermath of earnings 8 out of 12 previous reports. Based on the previous 12 earnings releases, NFLX is more likely to trade higher 1 day after earnings for an average gain of 0.1%. The absolute average return in the one week before earnings was ±2.1%. With an absolute average return of ±11.2% on earnings day.
How Non-Directional Option Strategies Have Performed Around Earnings:
The options prices predicted a ±8.7% post earnings move, compared to a -8.4% actual move. The options market overestimated NFLX stocks earnings move 62% of the time in the last 13 quarters. The predicted move after earnings announcement was ±8.7% on average vs an average of the actual earnings moves of 10.8% (in absolute terms). This shows you that NFLX tended to be more volatile than the options market predicted for the earnings stock price reaction.
Strategy | Average Return | Win Rate |
Long Straddle | 31% | 42% |
Long Strangle | 67% | 33% |
Credit Iron Butterfly | -28% | 33% |
Credit Iron Condor | -8% | 50% |
Key options trades from tigerPC:
sell $NFLX 20231027 370.0 PUT$
Trade Ideas:
Short 25-Delta Put(Win rate67%)
$Tesla Motors(TSLA)$
Tesla is scheduled to report earnings on 18-Oct-2023. The last time Tesla reported earnings on 25-Jul-2023, the stock decreased by 9.74%.
How Non-Directional Option Strategies Have Performed Around Earnings:
The options prices predicted a±7.2%post earnings move, compared to a-9.7%actual move.The options market overestimated TSLA stocks earnings move62%of the time in the last 13 quarters.The predicted move after earnings announcement was±8.1%on average vs an average of the actual earnings moves of6.2%(in absolute terms).
Strategy | Average Return | Win Rate |
Long Straddle | -9% | 42% |
Long Strangle | -20% | 42% |
Credit Iron Butterfly | 0% | 50% |
Credit Iron Condor | -4% | 58% |
Key options trades from tigerPC:
Trade Ideas:
1 Buying ATM Call(Win rate 58%)：1 Day After Earnings to 3 Days After Earnings
2 Debit Put Sprd (Win rate 58%)
$Microsoft(MSFT)$
The last time Microsoft reported earnings on 25-Jul-2023, the stock increased by 1.7 %.
As you can see from the table below, MSFT shares have moved higher in the immediate aftermath of earnings 6 out of 12 previous reports. Based on the previous 12 earnings releases, MSFT is more likely to trade higher 1 day after earnings for an average gain of 1.0%. The absolute average return in the one week before earnings was ±1.8%. With an absolute average return of ±3.8% on earnings day.
How Non-Directional Option Strategies Have Performed Around Earnings:
The options prices predicted a ±5.5% post earnings move, compared to a -3.8% actual move. The options market overestimated MSFT stocks earnings move 62% of the time in the last 13 quarters. The predicted move after earnings announcement was ±4.7% on average vs an average of the actual earnings moves of 3.9% (in absolute terms).
Strategy | Average Return | Win Rate |
Long Straddle | 2% | 42% |
Long Strangle | 2% | 42% |
Credit Iron Butterfly | -8% | 33% |
Credit Iron Condor | -8% | 50% |
Key options trades from tigerPC:
sell $MSFT 20231027 327.5 CALL$
Trade Ideas:
Short 25-Delta Put(Win rate 92%)
$Alphabet(GOOG)$
The last time Alphabet reported earnings on 25-Jul-2023, the stock increased by 5.59%.
As you can see from the table below, GOOG shares have moved higher in the immediate aftermath of earnings 7 out of 12 previous reports. Based on the previous 12 earnings releases, GOOG is more likely to trade higher 1 day after earnings for an average gain of 0.2%. The absolute average return in the one week before earnings was ±1.6%. With an absolute average return of ±4.7% on earnings day.
How Non-Directional Option Strategies Have Performed Around Earnings:
The options prices predicted a ±5.6% post earnings move, compared to a +5.6% actual move. The options market overestimated GOOG stocks earnings move 62% of the time in the last 13 quarters. The predicted move after earnings announcement was ±5.4% on average vs an average of the actual earnings moves of 4.6% (in absolute terms).
Strategy | Average Return | Win Rate |
Long Straddle | -6% | 42% |
Long Strangle | -26% | 33% |
Credit Iron Butterfly | -20% | 27% |
Credit Iron Condor | 11% | 58% |
Key options trades from tigerPC:
sell $GOOG 20240920 130.0 PUT$
Trade Ideas:
Short 25-Delta Put(Win rate 92%)
Short ATM Put(Win rate 83%)
$Meta Platforms, Inc.(META)$
The last time Meta Platforms reported earnings on 25-Jul-2023, the stock increased by 4.4%.
As you can see from the table below, MSFT shares have moved lower in the immediate aftermath of earnings 7 out of 12 previous reports. Based on the previous 12 earnings releases, MSFT is more likely to trade lower 1 day after earnings for an average gain of 0.4%. The absolute average return in the one week before earnings was ±1.5%. With an absolute average return of ±11.6% on earnings day.
How Non-Directional Option Strategies Have Performed Around Earnings:
The options prices predicted a ±8.8% post earnings move, compared to a +4.4% actual move. The options market overestimated META stocks earnings move 38% of the time in the last 13 quarters. The predicted move after earnings announcement was ±8.0% on average vs an average of the actual earnings moves of 11.4% (in absolute terms). This shows you that META tended to be more volatile than the options market predicted for the earnings stock price reaction.
Strategy | Average Return | Win Rate |
Long Straddle | 39% | 50% |
Long Strangle | 81% | 42% |
Credit Iron Butterfly | -40% | 33% |
Credit Iron Condor | -21% | 45% |
Key options trades from tigerPC:
buy $META 20250117 500.0 CALL$
Trade Ideas:
Long Straddle(Win rate 58%)
$Amazon.com(AMZN)$
The last time Amazon reported earnings on 3-Aug-202, the stock increased by 8.27 %.
As you can see from the table below, AMZN shares have moved lower in the immediate aftermath of earnings 9 out of 12 previous reports. Based on the previous 12 earnings releases, AMZN is more likely to trade lower 1 day after earnings for an average gain of 0.6%. The absolute average return in the one week before earnings was ±1.1%. With an absolute average return of ±6.9% on earnings day.
How Non-Directional Option Strategies Have Performed Around Earnings:
The options prices predicted a ±6.6% post earnings move, compared to a +8.3% actual move. The options market overestimated AMZN stocks earnings move 54% of the time in the last 13 quarters. The predicted move after earnings announcement was ±6.1% on average vs an average of the actual earnings moves of 6.6% (in absolute terms). This shows you that AMZN tended to be more volatile than the options market predicted for the earnings stock price reaction.
Strategy | Average Return | Win Rate |
Long Straddle | 17% | 50% |
Long Strangle | 32% | 42% |
Credit Iron Butterfly | -15% | 30% |
Credit Iron Condor | -20% | 50% |
Key options trades from tigerPC:
sell $AMZN 20231103 144.0 CALL$
sell $AMZN 20231110 110.0 PUT$
Trade Ideas:
Short 25-Delta Put(Win rate 75%)
Comments