Trade Alert: Earnings, 8/15/2023

A bullish bet on a retailer.

Our Updated Approach

Recall that we’ve been looked at six metrics yesterday when placing earnings trades:

1. LikeFolio’s earnings score based on social data. The higher the number, the more bullish, the lower (more negative) the number, the more bearish.

2. Portfolio Armor’s gauge of options market sentiment.

3. Chartmill’s Setup rating. On a scale of 1-10, this is a measure of technical consolidation. For bullish trades, I want a high setup rating; for bearish trades, a lower one.

4. Zacks Earnings ESP (Expected Surprise Prediction). This is a ratio of the most accurate analyst’s earnings estimate versus the consensus estimate.

5. The Piotroski F-Score. A measure of financial strength on a scale from 0-9, with 9 being best.

6. Recent insider transactions.

And, an additional change we made is to use longer dated options, covering more than one earnings release, where possible, to give the trade more time to play out. Here’s how the company we’re betting on today scores on the six metrics above:

1. Social data: +28

2. PA Options sentiment: moderately bullish

3. Setup rating: 8

4. Zacks ESP: +2.63%

5. F-Score: 6

6. Recent insider transactions: a relatively small open market sale in May.

Details below.

Our Bullish Trade