Schaeffer's Outside the Box Blog
Stocks quoted in this article:

It's January, which means you can officially put your "Looming Fiscal Cliff 2012" shirts and hats away and break out your "Earnings Season" wear.

Just to review, we had a couple of pre-season reports back two weeks ago. The options board was looking for a roughly 10% move in Research in Motion Limited (USA) (NASDAQ:RIMM). That turned into a serious undershoot, as RIMM dropped16.1% on the open and 22.7% by the next close. RIMM is certainly a high-profile name, but it's now high-profile for its overall ugliness, so not sure I would read much into this action as we move forward in our earnings-season analysis.

NIKE, Inc. (NYSE:NKE) was the other name we looked at. It jumped 3.5% close-to-open and 6% close-to-close. That's almost perfectly in line with the options expectation of a 4.5% move. It did have one commonality with RIMM, as they both continued to move in the same direction of the gap. That's not the worst trade in the world, I would note -- trading in the same direction of the gap with a stop-loss order somewhere within the gap.

Anyway, we're not here to talk about (only) the past.

Alcoa Inc. (NYSE:AA) traditionally kicks off earnings season, but unfortunately I'm not picking up an earnings expectation number. The stock is at a whopping $9.10 as I type. The weekly 1/11 9-strike calls trade at $0.25 per contract, and the weekly 1/11 9-strike puts trade at $0.10, so not exactly the most exciting options backdrop I've ever seen. If it moves $0.20, it's probably a "beat," though it will be tough to separate that out from any ordinary open.

Pre-open we have Monsanto Company (NYSE:MON), maker of all sorts of fun, genetically engineered food products. The options are looking for about a 3% move. There are no weeklies here, and not terrifically large volume or open interest. The biggest size are the January 2013 85-strike puts, with open interest of 11,780. It's a small-dollar play or cheap insurance against an accident, as the stock is near 96 and the puts are trading under $0.15 each.

Apollo Group Inc (NASDAQ:APOL), the once high-flying education services company (and early Rocky adversary) reports after the close. The options anticipate about a 9% move on the number. That's a bit under the ugly action of the October quarter, when APOL opened down 12% and got plowed from there, ultimately closing down 22.2%.

And those are the most interesting names in the next day or two. It will pick up soon I promise.

Disclaimer: The views represented on this blog are those of the individual author's only, and do not necessarily represent the views of Schaeffer's Investment Research.


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