Another notable earning reports today is from Home Depot (pre-market)$Home Depot(HD)$  

People are expecting Home Depot earnings to be dampened by weakening home sales due to increased mortgage costs.

My prefer trade would be selling call option at 335 $HD 20230317 335.0 CALL$ $HD 20230317 335.0 CALL$    expiring on 17 March before the PMI announcements come in.

335 because this is the higher of the next two resistance levels (see chart below) and there is still some money to be make as the call options is currently priced at $3. Even if the price is expected to drop when the market open, the price should have some time value left.

However, I do not expect the price of this option to drop too much because weak guidance is already priced in and traditionally Home Depot's 4th quarter earnings reports have also been strong due to the holiday season and winter months being a popular time for home improvement projects.

In addition, if mortgage rates are higher, it can also make it less appealing for people to move and more appealing for them to stay in their existing homes and undertake home improvement projects. This may lead to an increase in demand for home improvement products, which can positively impact Home Depot's earnings

Here is a summary of Home Depot's 4th quarter earnings reports from 2021 to 2018 for reference:

Q4 2021: Net sales of $32.3 billion, up 25.1% from the same period in the previous year. Comparable sales increased 24.5%, with comparable sales in the United States up 25%. Net earnings were $2.9 billion, up from $2.5 billion in the same period in the previous year.

Q4 2020: Net sales of $25.8 billion, up 2.7% from the same period in the previous year. Comparable sales increased 5.2%, with comparable sales in the United States up 5.3%. Net earnings were $2.5 billion, down slightly from the same period in the previous year.

Q4 2019: Net sales of $26.5 billion, up 10.9% from the same period in the previous year. Comparable sales increased 3.2%, with comparable sales in the United States up 3.7%. Net earnings were $2.3 billion, up from $1.8 billion in the same period in the previous year.

Q4 2018: Net sales of $23.9 billion, up 7.5% from the same period in the previous year. Comparable sales increased 7.5%, with comparable sales in the United States up 7.2%. Net earnings were $1.8 billion, up from $1.7 billion in the same period in the previous year.