Trade Alert: Earnings, 6/6/2023

Four bearish bets on companies reporting after the close today and before the open tomorrow.

Another fashion company is the focus of one of our four bearish trades today.

Four Bearish Trades For Today

For today, we’ve got four bearish trades on companies reporting earnings after the close today and before the open on Wednesday. As with Monday’s trades, we started with social data to identify these names, and then looked at a few other indicators for confirmation:

• Aggregate fundamental and technical ratings from Chartmill.

• Earnings Surprise Predictions from Zacks.

• Options sentiment from Portfolio Armor.

Of the four bearish trades we have today, all have fundamental ratings of 4 or lower, technical ratings of 1 or lower, Zacks Earnings Surprise Predictions of neutral (0%) or negative, and Portfolio Armor options sentiment from neutral to very negative.

Details below.

1. Stitch Fix (SFIX 0.00%↑). This is the fashion company in today’s batch. Bearish social data, Fundamental 2, Technical 1, Zacks ESP 0%, PA Options Sentiment very negative. The trade: a spread expiring on June 16th buying the $3.50 strike puts and selling the $3 strike puts for a net debit of $0.21. The max gain on 15 contracts is $435, the max loss is $315, and the break even is with SFIX trading at $3.29.

2. Lovesac (LOVE 0.00%↑). Bearish social data, Fundamental 4, Technical 0, Zacks ESP 0%, PA Options Sentiment negative. The trade: a spread expiring on June 16th buying the $22.50 strike puts and selling the $20 strike puts for a net debit of $0.90. The max gain on 3 contracts is $480, the max loss is $270, and the break even is with LOVE trading at $21.60.

3. Campbell Soup (CPB 0.00%↑). Bearish social data, Fundamental 4, Technical 1, Zacks ESP -1.17%, PA Options Sentiment neutral. The trade: a spread expiring on June 16th buying the $51 strike puts and selling the $50 strike puts for a net debit of $0.45. The max gain on 7 contracts is $385, the max loss is $315, and the break even is with CPB trading at $50.55. This one hasn’t filled yet. This one never got filled.

4. Dave & Buster’s (PLAY 0.00%↑). Bearish social data, Fundamental 4, Technical 0, Zacks ESP -0.71%, PA Options Sentiment negative. The trade: a spread expiring on June 16th buying the $30 strike puts and selling the $25 strike puts for a net debit of $0.60. The max gain on 5 contracts is $2,200, the max loss is $300, and the break even is with PLAY trading at $29.40.

Exiting These Trades

For each trade, I’m opening a Good ‘till Canceled limit order to close it at a net credit of about 90% of the spread (the difference between the strike prices of the options). In the case of SFIX, for example, we have a $3.50 strike option and a $3 strike option, so the spread is $0.50. 90% of $0.50 is $0.45, so that’s where I’ll be placing my limit order to exit this trade. If that order doesn’t get filled after earnings, I’ll lower the limit price as necessary as we get closer to expiration.

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