Those companies were selected from a universe of U.S. stocks that have a market capitalization of more than $500 million and are reporting quarterly results in April. MKM's screen also selected stocks with a nine-day relative strength index, or RSI, less than 50. RSI is a technical market indicator that compares the relative size of gains versus losses. A lower figure typically signals a security is cheap.
The analysis then looked for stocks with options open interest of more than 20,000, an indication shares could move significantly after reporting earnings.
"We just want to identify situations where individual stocks in varied oversold states (RSI below 50) could see a catalyst in the form of upside earnings surprises," Strugger said, noting fundamentals or tax reform benefits didn't play a direct role in selecting the stocks.
Post-earnings, options traders are expecting an absolute, up or down move of 7.8 percent for AMD, 6.8 percent for Cypress Semiconductor and 5.7 percent for Lam Research, the MKM report said.
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