The Trade Process starring Garmin

Garmin Ltd. reports earnings on October 30 and I wanted to dive in to see what has been driving the strength over the past 2 months (up 8 weeks in a row). Some FA data:

  • P/E of 18
  • 9.5 Billion market cap
  • EPS 2.70

Here is a Daily chart:

GRMN

It appears that the stock decided to rest this week and put in a tight Flag with the RSI continuing to hang out near the 70 level. 

Here are some other data points to consider when constructing a trade. First I look at the Options flow in the current expiration cycle (November):

GRMN_Nov_Options
As you can see the $50 Put has the most Open Interest at 2,008 contracts. This could simply be traders adding protection to long stock positions however. The $49 Straddle (closest to price currently) closed at $3.70 on Friday so a 7.5% expected move is what Option traders are expecting.

On the subject of Short Interest, here is a look at Short Interest (courtesy of Forbes):
GRMN_short_interest_Forbes

Some times the Bears get it right, some times this is Fuel for a larger up move.

Leave a Reply

Your email address will not be published.