Earnings Preview For The Week Of April 16

In this sunday morning preview, I’m going to look at 5 of them deeper with a focus on their option flows out of my database and the charts involved to give you an idea of where to sell puts if you’re interested. I try not to be long into earnings because it is a crapshoot, but I do try to sell puts at key levels and maybe take ownership of a quality stock and I will discuss those below. There are too many high quality names to discuss this week so I chose Tesla, Bank of America, Netflix, Johnson & Johnson, and Ally Financial(just because it is one of the top names directionally in my notes)

I know many of you like to play earnings, and I do sometimes sell puts into earnings, but as a big believer in Post Earnings Drift, I prefer to wait, see what has good reactions after earnings and then target selling puts at the gap it created AFTER earnings. I think you all have seen in the last nearly year I’ve done this that PEAD is a real thing and names really do drift in both direction after a strong or weak report. So for me, other than the thrill of gambling on something, the most prudent move is to wait till after a name reports and then ride the wave in the direction created.

A calendar of the bigger names reporting this week

1. JNJ is an interesting one, this thing has been up every week since I made it my best idea in March. It is just such a bad name for a put seller like me, it uses alot of margin and the payouts are quite low, so I don’t really mess around with it. The option flows are nearly all bullish, these healthcare names will become hot again once the market decides to cool off its tech binge.

   

   The Charts show a strong weekly with the moving averages starting to curl up. The MACD just flipped green as well, so a prolonged move may be in store if earnings are ok. The daily has a gap below at nearly 159 that I would target for a long if you want that.

   

   

2. NFLX