Earnings Play - Key Metrics - nyse:ACN

kmiklas

kmiklas

I've Googled around, but can't seem to find a good, definitive guide on how to make an earnings play.
  • Can you direct me to a specific article that provides a good outline of how to make an earnings play?
  • What are the key metrics that you look at before making an earnings play?
Specifically, I'm thinking of making an earnings play on Accenture (nyse:ACN) tomorrow--they report before the bell on Wed 21 Dec. My current view is that, given the recent plunges on weak guidance from CSCO, ORCL, and some of their peers, it only stands to reason that Accenture--a major source of tech talent for these firms--would be dragged down with them.

At the same time, I'm not so sure that this argument is sufficient to justify a short position. Most concerning is that Financials have soared. Accenture peeps are not cheap; Financials are those with the ca$h to hire Accenture people, and they may now have more money floating around for hiring tech talent.

Any opinion regarding other indicators that I might look for, and/or earning play guidance (not to be confused with forward guidance! :D ) would be helpful.

Thank you, and have a profitable day! Sincerely, Keith =^)
 
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Kieth... I think you're ready to graduate to Options. Read up on some basic strategies. That's the best and safest way to play ER's. Its pretty easy really. You'll pick it up quicker than most too I suspect.

Plus, you have a great wealth of knowledgeable people right here on ET that I'm sure will help you along the way.
 
vanzandt said:
Kieth... I think you're ready to graduate to Options. Read up on some basic strategies. That's the best and safest way to play ER's. Its pretty easy really. You'll pick it up quicker than most too I suspect.

Plus, you have a great wealth of knowledgeable people right here on ET that I'm sure will help you along the way.
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Thanks, Vanzi! I took a course at NYU that focused on options, so I'm not a total stranger to them. any links?
 
kmiklas said:
Thanks, Vanzi! I took a course at NYU that focused on options, so I'm not a total stranger to them. any links?
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elitetrader.com ;)
Its all here.
Or twitter Marsman! You'll own a yacht in 30 days. Risk free. :D:D:D

I'll see if I can find some good links for ya.
 
Bit late, but buy Jan-20'17 124 straddle @ about 6.80 and sell Jan-06'17 114/132 strangle at about 1.10...

the Dec-23'16 straddle is about 4.50, so using that as guideline ACN moves maybe 5 bucks... That Jan-06 strangle will lose lot's of IV afterwards, since the holidays are coming up and that's the month to be vega short... I would say that IV will be at about 16 afterwards. And you might make a bit on the Jan-20 straddle if it moves...

Hmm... no money on it but it still feels like I'm putting my balls on the block for you guys to smash....
 
JackRab said:
Bit late, but buy Jan-20'17 124 straddle @ about 6.80 and sell Jan-06'17 114/132 strangle at about 1.10...

the Dec-23'16 straddle is about 4.50, so using that as guideline ACN moves maybe 5 bucks... That Jan-06 strangle will lose lot's of IV afterwards, since the holidays are coming up and that's the month to be vega short... I would say that IV will be at about 16 afterwards. And you might make a bit on the Jan-20 straddle if it moves...

Hmm... no money on it but it still feels like I'm putting my balls on the block for you guys to smash....
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Nah man. At the end of the day, I take full responsibility for my trades.

Thanks for your response. I appreciate it.
 
Keith... his post really was good. You should study up on what each part of it means if you don't already know and use its basics as a template going forward.

I do like your thesis on how the financials latest run might bolster ACN. It might be a tad early this ER... but I think you can bank on it next ER. Good thinkin' dude. ;)
 
vanzandt said:
I do like your thesis on how the financials latest run might bolster ACN. It might be a tad early this ER... but I think you can bank on it next ER. Good thinkin' dude. ;)
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Thanks Vanzi! Yes, the Financials do hire a lot of Accenture consultants. For lack of a better word, Accenture consultants are EXPENSIVE. Right up there with IBM. A while back I was working as a consultant for a Financial firm through a mom n' pop shop consulting house. I have a Masters degree, and they were paying $90/hr for me. Next to me sat an Accenture consultant, and they were paying $500/hr for her... and she had only a Bachelors degree. (I'd be surprised if she saw more than $60/hr of that fee).

The Financials are scooping up tech talent, particularly in security. With all these breaches, it's just a matter of time until a major breach happens at a financial; even a relatively small hack with hundreds of accounts compromised would be a blow. Financials are fearful of this; it could cause a run on the bank, and they are willing to pay big bucks for protection.

vanzandt said:
Keith... his post really was good. You should study up on what each part of it means if you don't already know and use its basics as a template going forward.
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I'm now studying everything that both of you gave me.
- Watching not only the vid that you posted above, but also all of the videos from Option Alpha. They have a whole youtube channel.
- Dissecting the pieces of the trade that he set forth.
 
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JackRab said:
Bit late, but buy Jan-20'17 124 straddle @ about 6.80 and sell Jan-06'17 114/132 strangle at about 1.10...
More...
Does this look right?

acn3.png
 
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