MomentumOptionsTrading.com Midday Update for 5/1/14
Flat Action Ahead of Friday’s Big News
Futures were flat throughout the night and ahead of the overseas markets opening and remained that way here at home ahead of Wall Street’s first session for May. We had a feeling today might be confined to a tight trading range as the Nonfarm Payrolls report on Friday could be a trend changer. We mentioned yesterday we would like to see a print of at least 280,000-300,000 jobs added.
There have been a few notable earnings surprises and we missed a nice trade in T-Mobile (TMUS, $31.40, up $2.11) as shares are surging 7% today.
We profile a number of earnings trades in our Weekly Wrap when we are doing our weekend homework and had a feeling the company would report a surge in new users after its acquisition of MetroPCS. However, we were unsure of what their bottom line would look like as integrations can be expensive.
Needless to say, although new subscribers grew 2.4 million for the quarter but T-Mobile posted a loss of $0.19 a share, or $151 million. It would have been a risky bet but the May 30 calls (TMUS140517C00030000, $1.80, up $0.60) are surging 50% and have reached a peak of $2.50 as T-Mobile shares have traded up to $32.32.
We have an earnings trade for today on a company reporting after the close. The options we are profiling have a chance to make triple-digits if shares can make a double-digit move in extended trading and hold the gains on Friday’s open.
The history books show the Dow has finished positive 12 out of the past 16 years on the first day of the May. This puts the odds at 75% the blue-chips end the session higher. As we make the turn, the Dow is down a dozen points to 16,568 while the S&P 500 is popping a point to 1,885. The Nasdaq is jumping 16 points to 4,130 and the small-caps are up 2 ticks to 1,128. A good sign.