Playing EXPE Post Earnings.

EXPE out with a strong report a bit light on EPS but blow out revs, as has become the normal for the company.  I decided to take a quick look to see if there would be a trade after the event and here is what I found.

10/25/12 report showed a 15% up move
07/26/12 report showed a 20% up move
4/26/12 showed a 23.5% up move

Certainly impressive moves showing a three quarter average move of 19.5%

Shares are currently showing about a 4.5% after hours move.

One thing Found interesting was each time shares would close right around the opening price the following day despite each time having a roughly 10% intra day range.

10/25 op 58.95 closed 59
7/26 open 53.68 closed 54.90
4/26 open 39.19 closed 40.31

So roughly within $1, but there are no weekly calls/puts in the name so I took a look at how the stock traded the following week, and here is what I found.

10/25 closed 59 following week closed 59.07   +.1186%
7/26 closed 54.90 following week closed 57.45  +1.9%
4/26 closed 40.31 following week closed 40.98  +1.66%


Now this report does not signal similar huge upside reaction, but it could move higher tomorrow in the premarket.


So one possible way to play this is by being short a strangle taking the $70 it is in the after hours and the positive historic bias in the name one could consider being short a 72.50/70 strangle.  Now here we would be banking on the higher move the following week, but preferbly would be a 72.50/67.50 strangle if we used the same $70 stock price, but i do not see 67.50 puts being open.  If this strangle took in $1 in premium you would have 5% in either direction before you began to incur losses, if it took in $2 of premium one would have a 6.5% range to work with.  Both are well above the prior three quarters reports.

I am not one to be naked puts/calls overnight intraday sure occassionaly, but rarely would I do so overnight, but others may be willing to.  And I would not recommend anyone without at least a $1 million dollar account to do so, but to each their own.



So the strategy I would be most interested in would be shorting the 72.50-75 call spread & shorting the 67.50-65 put spread or the 70-67.50 put spread, because I like to have my risk determined when entering any sort of trade that I plan on being invovled in for more than an hour or so.  Of course if EXPE closes tomorrow at 72.50 I would adjust each spread to reflect the additional 2.50 in share price. I do believe shares at 72.50 would be better as it would bring EXPE up 10% on the day and create a more similar situation to the ones described above.


The short spreads is something i will consider tomorrow at the close, but I will need to receive in premium at least $1 to get me invovled.


Just a thought, not a recommendation.

Good Luck, been a wild market...