Earnings season may not officially begin until the big banks report starting Wednesday, but the Delta calls we covered Tuesday more than TRIPLED after strong numbers and guidance for the airline Friday morning!
At the time we sent Tuesday’s newsletter (3 p.m. ET), these Jan. 17 expiration, $62 strike calls were going for $1.93, and they topped out at $6.48 this morning…
Once again giving us the ideal earnings setup.
Find a play you like several days ahead of the earnings event, ride the wave higher (assuming it moves higher) — they traded up to $2.20 yesterday — and then take some profits before the report, leaving on a runner to catch the potential home run (or bust) catalyst.
No, it doesn’t always work out like that and as we’re sure you know, nothing is guaranteed in trading.
But that is the ideal way to play a major catalyst event when everything works in your favor. And a play going from $1.93 to $6.48 (it’s still trading above $6.00 a contract as of 12:30 p.m. ET Friday) is a grand slam!
Delta reported some banger numbers this morning, and the CEO said he expects 2025 to be the company’s “best financial year in our history,” hence today’s juicy double-digit pop in shares.
As for what’s hitting today…
We saw bullish and bearish bank plays, the first being a bullish bet in Citigroup (C ) in the April expiration, $80 strike calls.
Now, we don’t trade stuff that far out as a general rule of thumb around here. So we’d move that expiration date up considerably if we felt great about a Citi beat — we also like the hefty $1.3 million in premium behind this play, a significant amount. This play is also about $8.50 out of the money because it’s so far off.
So, again, if we felt great about a Citi beat, we’d move within the market maker’s expected move of $3.23 higher or lower by next Friday, so the $74 strike or closer (the Jan. 17, $72 strike calls are about $1.45 each as of Friday afternoon).
For the next play, we have Bank of America (BAC), and this time we have the February $44 strike puts with shares trading just above $45 today. These could be a hedge against a long stock position, but they are fairly close to the money. The closer to the money for puts, the higher the conviction.
Finally, we saw two orders hit the Penny Options Dashboard on Wednesday in Applied Digital (APLD), which reports after the close Tuesday.
Now, a couple of things…
These two orders are quite small, only about $9k and $20k in premium between them, and the trader who bought them is down pretty big with shares dropping over 5% with the broad market sell-off.
However, they are cheap after APLD dropped 5% today. So if you’re looking for what could end up a fun, cheap rebound play, they might be worth a look.
Market makers expect a move of $1.50 higher or lower by expiration, so the $10 strike is probably too far out of the money. The $9 strike or even $8.50 is where we’d look to go IF we felt really good about a beat or a rebound pop for APLD.
As always, respect that risk — they’ll go to $0 fast if wrong!
Order Flow:
*This is for informational and educational purposes only. These are not official alerts issued by Lance, but rather some interesting orders picked by the team at Lance Ippolito Trading.
There is inherent risk in trading. Trade at your own risk.
Note: If no date is listed after the month, it’s the monthly expiration (third Friday).
The team at Lance Ippolito Trading
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*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.
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The profits and performance shown are not typical. We make no future earnings claims, and you may lose money. The trades expressed are from an internal audit that applied a new set of option criteria to Lance’s real published alerts of the last year. The result has the benefit of hindsight but had an 85.1% win rate, 38% average return (winners and losers combined) with an average hold time of 11 days.
