PCLN EARNINGS PLAY

ODDS/PROBABILITIES

PCLN earnings since 1999, a total of 42 (N=42)
Earnings with less than 10% move= 14, which is 33%
Earnings with 10-20% move- 18, which is 42%
Earnings with more than 20% move- 10, which is 24%

In summary, the odds of PCLN moving more than 10% after earnings is 67%

BROKER PRICE TARGET

PRICE TARGET SUMMARY
Mean Target: 195.08
Median Target: 200.00
High Target: 235.00
Low Target: 150.00
No. of Brokers: 13

JPM and Kaufman Bros have 200-210 as the price target on PCLN. It has no resistance until 200-210, which was the support in May 2006! Isn't that amazing the analyst price target and the next resistance level match exactly.

With so many shorts waiting to pounce on it for earnings, I will not be surprised to see it going to 200 in one final short squeeze climax

STRATEGY

I usually close my options the day after earnings but with PCLN I may keep it until Nov opex with the following strategy

50% BF Call spread (180/200/220) and 50% BF Put spread (165/145/125). Looks like low risk and good reward to me as long as PCLN closes between 190-200 or between 145-155 at opex.

Is the above strategy better than 50% Nov 165/150 put spread and 50% Nov 180/195 call spread strategy?

The above strategy is subject to change. I will update what strategy I employ tomorrow between 3-4 PM

UPDATE: Bought Nov 180/200 call spread ONLY. I rarely do this but this one is a pure Lotto play.

For a high reward strategy, visit Annamall's website.