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$JD Options Play into Earnings

The company’s stock is currently trading around $35.14 in a 52 week range of $19.15-$35.56. The stock has been shown on fire over the past year with shares up 35% over the past 12 months. I think that the upside has more to come and JD will pop hard on Earnings. To confirm this signal we will analyze the stocks historical movement record on earnings, the current expectations for movement being priced into the options market, the technical setup, and institutional order flow into the event.

First we will examine the stocks historical earnings performance record. We can see that over the past 8 quarters the stock has rallied 6 times on earnings day with an average move of 4.9%. This does not tell us that the stock is guaranteed to rally this quarter but it does show us that there is a slight bullish bias in the performance of JD on earnings day. This means that as we work through the rest of our analysis will have a bullish bias.

With a sense of how the stock has moved on earnings day in the past we can calculate the expected movement for this quarter. To best isolate the expected movement in JD we will use the shortest dated options that still contain the catalyst event. In this case we will use the May 12th weekly expiry. To measure the market makers expected move we will need to calculate the price of the at the money straddle. We looked at the JD $35 strike straddle in the May 12thweekly expiry and it is implying a whopping $2.00 move.

Get the Full Options Trading Setup for $JD HERE >>>>