Adobe Systems Incorporated [Nasdaq: ADBE, $78.57] is scheduled to report earnings following today’s market session. Stock performance has been strong; shares are up nearly 8% year to date in 2015, following a near 25% increase in price for 2014.
Like many other tech stocks, ADBE is a favorite of earnings traders. Shares have rallied following 2 of the past 4 earnings announcements, and 6 of the past 8. The stock on average moves 6.9% following earnings calls, and ADBE offers weekly options allowing traders to better isolate the catalyst movement.
This week’s at-the-money straddle, expiring on Friday March 20, is implying a move of about 5.5%. The market on the Mar Weekly ADBE 77.5 Straddle is $4.20-$4.47, with the 80 straddle trading $4.30-$4.54.
Analysts are estimating EPS of $0.39 on revenue of $1.09 billion, compared with EPS of $0.30 on year prior (which beat estimates by a nickel) on $1 billion in sales. The stock has traded in a 52-week range of $57.15-$80.30.
My Trade
- Buy the Mar Weekly ADBE 80-82.5 Bull Call Spread for $0.80
- Risk: $80 per 1 lot
- Max Reward: $170 per 1 Lot
- Break-even (stock price at expiration): $80.80
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