The above graphic is via Estimize and is the EPS information they provide (I added the Red lines however). It appears that the consensus on Estimize is near $2.25 for EPS as it heads into Earnings AMC today (4/27).
If you don’t currently trade Options that is fine – you may find this subject peeks your interest as I discuss the Put Ratio.
During my weekend review I noticed that several of my positions had Put Ratios that were drifting ITM (into the money) or very near it. Let me list a few positions here and then go over why I like this approach for protection:
Skyworks Solutions$SWKS I am Long stock at $63 (since 11/18). The Option pieces: I am short the Jan 2016 $100 Calls (covered) and Long the April 24w 95/88 1×2 Put Ratio
Zillow$Z I am Long stock at $82.96 (since 4/14). The Option pieces: I am short the May 08w $97 Calls (covered) and Long the 95/88/85 1×2 Split Put Ratio (L the $95 Puts, S the $88 & $85 Puts to create the ratio)
Avago Tech$AVGO I am Long stock at $105 (since 11/26). The Option pieces: I am Short the July $125 Calls (covered) and Long the May 125/115 1×2 Put Ratio
If you do you homework to pick solid strikes, you can gain downside protection at a very low cost (does take margin however). I typically use a Stop on the stock if it gets anywhere near the middle range of the Put Ratio.
Another use of the Put Ratio
If you think there is more short-term weakness in the stock but see a level below where you own it – choose that level for the lower portion of the Put Ratio. For example:
If you think stock XYZ is going to $50 – and is currently trading at $54.00 then consider going Long the 52.5/50 1×2 Put Ratio. You can capture a move down thru $52.50 all the way to $50. B/E will be at $47.50 +/- what you pay/get for the trade.
A pullback Buy candidate
Back inside the Channel. A RSI Buy
I like the Hammer on Friday, will look for confirmation on Monday
Held Support & bounced. Back over this Rising TL too (blue line)
Trying to breakout over this Rising TL