Earnings Season Highlights

Refresh your browser for the latest updates!
A collection of noteworthy post-earnings reactions
Published on May 26, 2023 at 4:30 PM
  • Market Recap

Stocks extended their rallies into the long weekend, with Wall Street brushing off hot inflation data for April as optimism over a U.S. debt ceiling deal grew. The Dow added 328 points to snap a five-day losing streak, but still registered a weekly loss.

Meanwhile, the Nasdaq scored a fifth-straight week of gains to settle at its highest level since August. The S&P 500 did the same en route to weekly and daily wins. Elsewhere, the Cboe Volatility Index (VIX) clocked its best week since May 5.

Continue reading for more on today's market, including:

  • How does a trader avoid options assignment?
  • Debt ceiling talks likely to dominate coming week.
  • Plus, retail stock enjoying post-earnings surge; put traders betting on BIG; and more of this weeks' top headlines.

Summary 0526

Nyse nasdaq 0526

 Things to Know Today 

  1. JPMorgan Chase (JPM) reportedly cut roughly 500 positions this week among its technology and operations groups, but is hiring for 13,000 job openings. (CNBC)
  2. Ford Motor (F) stock surged after the car maker inked a deal with Tesla (TSLA) to allow Ford electric vehicle (EV) owners use Tesla charging stations. (MarketWatch)
  3. A surprise profit boosted this apparel stock.
  4. Why put traders blasted Big Lots stock.
  5. Unpacking this week's biggest retail earnings reports.

Earnings May 262023

UVOL 0526

Gold Prices Fall for 3rd Straight Week

Oil price settled higher on Friday to score a 1% weekly gain. Though the future of crude output is unclear, knowledge the U.S. government often buys crude below $70 boosted the commodity, especially amid recent efforts to refill the Strategic Petroleum Reserve. July-dated crude added 84 cents, or 1.2%, to close at $72.67 per barrel.

Gold prices also moved higher for the day, but marked a third-straight week in the red with a 1.4% dip. Evidence of persistently high inflation boosted the safe-haven asset today. For the session, June-dated gold rose 60 cents, or about 0.1%, to close at $1,943.70 an ounce.

Published on May 26, 2023 at 1:51 PM
Updated on May 26, 2023 at 1:52 PM
  • 5-Minute Market Rundown

This week the U.S. debt ceiling once again took center stage, as multiple meetings between lawmakers failed to produce a resolution. A divided central bank also put pressure on sentiment, with an upward revision to gross domestic product (GDP) and better-than-expected jobs data failing to lift Wall Street's spirits. However, the Nasdaq Composite Index (IXIC) rallied after Nvidia's (NVDA) blowout quarter boosted the tech sector, and is pacing for its fifth-straight weekly win. The Dow Jones Industrial Average (DJI) and S&P 500 Index (SPX) are heading for weekly losses, while the Cboe Volatility index (VIX) is eyeing a win.

Retail Earnings Take Center Stage

The sour sentiment on Wall Street came amid a flood retail reports. Kohl's (KSS) shared an unexpected profit despite higher-than-usual inflation, while Gap (GPS) also posted a surprise earnings beat. Discount retailer Big Lots (BIG) fell to a more than 30-year low, after turning in quarterly losses that nearly doubled expectations.

Home improvement retailer Lowe's (LOW) shared better-than-expected first-quarter results, but lower 2023 forecasts weighed on the results, while strong demand and leaner inventory levels helped Urban Outfitters (URBN) best expectations. Outside of retail, NVDA soared to an all-time high after earnings, while Snowflake (SNOW) eyed its worst day ever following its quarterly results. 

Stocks to Watch Right Now

Subscribers to Schaeffer's Weekend Trader got an early look at why eBay (EBAY) is heading for a short-term drop. Conversely, Electronic Arts (EA) and Starbucks (SBUX) both just pulled back to historically bullish trendlines. Yelp (YELP) may also be worth keeping an eye on, as its top shareholder is urging for a sale or merger, calling the stock "shockingly undervalued." Don't forget about our Options Under $5 service, which helped subscribers more than double their money on our KB Home (KBH) recommendation. 

How to Play Memorial Day

With markets closed on Monday for Memorial Day, investors will have a shortened week to ponder debt ceiling negotiations and earnings reports. Schaeffer's Senior Quantitative Analyst Rocky White compiled a list of the best stocks to own before the holiday, while Schaeffer's Senior V.P. of Research Todd Salamone quantified the latest market sentiment change.

Published on May 26, 2023 at 11:59 AM
  • Midday Market Check
Published on May 26, 2023 at 10:37 AM
  • Intraday Option Activity
  • Analyst Update

Apparel retailer Gap Inc (NYSE:GPS) is up 12.1% to trade at $8.32 at last check, after reporting a surprise first-quarter profit of 1 cent per share amid restructuring efforts and easing supply chain pressures. The shares are brushing off a revenue miss, as well as three price target cuts, including one from UBS to $6 from $7.

Analysts are bearish toward GPS, with 12 of the 13 in coverage calling it a tepid "hold" or worse. Meanwhile, short interest is up 6.4% in the most recent reporting period, and the 31.45 million shares sold short now make up 17.5% of the stock's available float.

Gap stock is bouncing off yesterday's three-year low of $7.22, however, while eyeing its first close above the 20-day moving average in over one month. Familiar pressure at the $8.80 level seems to be keeping this rally in check, and year-to-date GPS is still down 27%.

Options traders are more optimistic than usual. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), GPS' 50-day call/put volume ratio of 2.58 sits in the 97th percentile of its annual range.

Overall options volume is today running at eight times the intraday average, with 12,000 calls and 12,000 calls exchanged so far. Most popular is the weekly 5/26 7.50 put, which expires at the close.

Published on May 26, 2023 at 10:28 AM
  • Buzz Stocks
Published on May 26, 2023 at 9:04 AM
  • Opening View

Stock futures are struggling for direction ahead of the open, as investors unpack a slew of economic data to finish out the week. Inflation remained high in April, per the personal consumption expenditures (PCE) price index, which rose 0.4% for the month and 4.7% on an annual basis.

Elsewhere, durable goods rose 1.1%, and the U.S trade deficit in goods jumped 17% to $96.8 billion. On the political front, a debt ceiling agreement appears to be making progress, with a rumored two-year deal that caps spending on everything but military and veterans, per a U.S. official.

Continue reading for more on today's market, including:

  • Understanding options assignment and the risk involved. 
  • 3 retail stocks that made big post-earnings swings. 
  • Plus, stocks making outsized moves after this morning's reports. 

Futures MAy26

5 Things You Need to Know Today

  1. The Cboe Options Exchange (CBOE) saw more than 1.5 million call contracts and 850,212 put contracts exchanged on Thursday. The single-session equity put/call ratio fell to 0.56 and the 21-day moving average stayed at 0.70.
  2. Marvell Technology Inc (NASDAQ:MRVL) is up 16.6% premarket, after the semiconductor name beat top- and bottom-line estimates in the first quarter. No fewer than 13 analysts lifted their price targets after the event. Heading into today, the stock is 33.6% year-to-date. 
  3. Ulta Beauty Inc (NASDAQ:ULTA) is down 9.9% before the bell, despite the company's strong first-quarter results and raised sales forecast, after comparable sales missed estimates. Plus, the retailer cut its annual operating margin forecast. No fewer than 13 analysts slashed their price targets on ULTA. Year-to-date, the equity is up 3.4%. 
  4. Workday Inc (NASDAQ:WDAY) is up 9.5% in electronic trading, after the company's better-than-expected first-quarter results. Workday also lifted its subscription revenue guidance, and a flood of analysts lifted their price targets. WDAY is up 17.4% since the start of the year. 
  5. See what economic data and earnings are scheduled for next week. 


Whole Globe Unpacks Economic Data

The stateside tech rally helped stocks in Asia rise to close the week, while Hong Kong’s market was closed for a holiday. Japan’s Nikkei rose 0.4%, even after government data showed the country’s 12-month consumer price index (CPI) came in at 3.2%, while its core inflation reading rose at its fast year-over-year pace since 1982. China’s Shanghai Composite also tacked on 0.4%, while South Korea’s Kospi rounded out the region with a 0.2% pop.

European markets are higher this afternoon, as investors closely monitor U.S. debt ceiling negotiations. Germany’s DAX is up 0.4% at last glance, after reports showed Europe’s largest economy yesterday entered a technical recession. London’s FTSE 100 sports a 0.3% midday lead, after U.K. retail sales volume rose 0.5% in April – higher than economists anticipated – and the International Monetary Fund (IMF) agreed with the Bank of England’s (BoE) view that a recession will not happen this year.  Lastly, the CAC 40 in France was last seen 0.5% higher.


Published on May 25, 2023 at 3:13 PM
Updated on May 26, 2023 at 8:34 AM
  • Options Recommendations

Last week, Schaeffer's Weekend Trader subscribers doubled their money with our Academy Sports and Outdoors Inc (NASDAQ:ASO) July 65 put. Below, we'll dive into the telling points for this bearish bet on the energy drink giant. 

When the recommendation was made on May 15, Academy Sports and Outdoors stock had just pivoted lower at the $65 level, and, earlier in the month, broke below a trendline connecting higher lows since early December -- where it eventually failed a retest. Further, during the week of the recommendation, ASO broke below its key 80-day moving average, as well as its pre-earnings March close that preceded a gap higher. 

The stock also failed to capitalize on falling short interest. What's more, the shares fell below the put-heavy 60-strike, setting it up for moves down to put-heavy strikes at the $50 and %55 levels.

From May 15 to May 24, Academy Sports and Outdoors stocked managed to turn in just two winning sessions, losing more than 14% over that time span. We closed the position on May 25, allowing subscribers to collect the 100% target profit. 

ASO Chart May 252023

Published on May 26, 2023 at 8:00 AM
  • Strategies and Concepts

Options assignment is a process in options trading that involves fulfilling the obligations of an options contract. 

It occurs when the buyer of an options contract exercises their right to buy or sell the underlying asset. The seller (writer) of the options contract must deliver or receive the underlying asset at the agreed-upon price (strike price).

What is Options Assignment?

Options assignment can happen when the owner of an option exercises their right to buy or sell shares of stock or when options expire in the money (ITM). This process can be complex and involves various factors such as the type of option, expiration date, and market conditions.

There are two main styles of options contracts: American-style and European-style. American-style options allow the buyer of a contract to exercise at any time during the life of the contract. In contrast, European-style options can only be exercised on the expiration date.

Traders selling American-style options are at risk of assignment anytime on or before the expiration date. While they can technically be assigned anytime, the option must be ITM for the owner of the contract to benefit from exercising their right. 

On the other hand, many options traders prefer to sell European-style options as it is impossible to be assigned before the expiration date, giving them more flexibility to hold their contract without worrying about being assigned early. 

Who is at Risk of Assignment in Options Trading?

Traders with short options positions are at risk of assignment because they have sold the option and are obligated to deliver or receive the underlying asset. If the owner of the options contract decides to exercise their rights, the seller of the options contract must fulfill their obligations.

Traders with long options positions are not at risk of assignment as they are in control of exercising their options. A long option holder has the right, but not the obligation, to buy or sell the underlying asset at the strike price. If the long option holder decides not to exercise their options, they can let the options contract expire worthless.

What is the Risk of Assignment?

The risks associated with options assignment are primarily centered around the obligations of the seller of the options contract. If the holder of the options contract decides to exercise their right to buy or sell the underlying asset, the seller must fulfill their obligations.

For example, if a trader sold a put option with a $100 strike price, and the stock dropped to $90, they would still have to buy the stock at $100 per share. When an option is ITM, it generally indicates that the seller of the option is in an unfavorable spot.

Of course, if you sold a $100 strike put option when the stock was trading at $120, and now it is trading at $90, the seller is likely regretting their original trade. However, it is impossible always to time the market perfectly, and assignment risk is the risk option sellers must assume. 

Traders must be aware of market conditions that could increase the risk of assignment, such as large price movements in the underlying asset. Option selling strategies benefit from a stable market environment, so you must ensure the stock you are trading will remain stable until the expiration date. Events that may cause significant market volatility, such as earnings, are crucial to be aware of when selling options. 

How to Avoid Option Assignment

While it may not be possible to avoid options assignment completely, there are several strategies that options traders can use to reduce the likelihood of being assigned.

One strategy is to manage short options positions by closing the position if your strike gets tested. For example, if you sold a $100 strike put when a stock is trading at $120 per share, you can avoid assignment by closing the position before the stock drops under your strike price of $100. 

Another strategy is to roll over your option, which means you close it out and simultaneously sell a new contract with a different strike price and/or date. Traders can roll their contracts to the same strike price at a further date or even roll it down or up to ensure their contract stays out of the money (OTM). 

These strategies may not always be effective in avoiding assignment. Traders should always be prepared to fulfill their obligations if they are assigned and have a plan to manage their positions accordingly. If a stock moves hard overnight, there is no guarantee you will successfully avoid assignment. 

Do You Keep the Premium if You Get Assigned?

Yes, if you get assigned on a short options position, you still keep the premium you received initially. However, it is important to note that if you are assigned, you will also be obligated to fulfill the contract terms by buying or selling the underlying asset at the strike price. This means you may incur additional costs associated with fulfilling your obligation, such as purchasing the underlying asset at an unfavorable price.

What Happens When Your Covered Call Gets Assigned?

If a covered call gets assigned, the seller of the call option must sell the underlying stock at the strike price to the buyer of the call option. The seller will still be able to keep the premium received from the sale of the call option.

For example, if you own a stock at $100 per share and sell a $130 strike call option, you will be forced to sell if the stock is above $130 on the expiration date. Additionally, you can be assigned before the expiration date if the stock is trading above your strike price. 

While the covered call seller will still generate a profit from this trade, the downside is you are likely missing out on more upside potential had you not sold the covered call. The seller of the covered call doesn’t have to do anything, as the broker will take care of the assignment for you. 

Are Options Automatically Assigned?

If you are an option seller, your option will either be exercised by the buyer or automatically assigned if it is ITM on the expiration date. 

If you are an option buyer, your option will not be automatically assigned before expiration. However, most brokers will automatically assign ITM options on the expiration date. 

Published on May 25, 2023 at 4:28 PM
Updated on May 25, 2023 at 4:36 PM
  • Market Recap

The Nasdaq and S&P 500 rallied on Thursday, the former scoring its best single-session gain in nearly three weeks. Semiconductor and artificial intelligence (AI) stocks led the charge, on the heels of Nvidia's (NVDA) blowout report. Elsewhere, the Dow logged a fifth consecutive loss, while the Cboe Volatility Index (VIX) snapped a four-day win streak.

Continue reading for more on today's market, including:

  • 2 chip stocks boosted by Nvidia earnings.
  • Why Dollar Tree stock fell today.
  • Plus, options bulls play NVDA's big day; Snowflake stock's plunge; and how ASO lined bears' pockets.

Closing Index Summary May 252023

NYSE and Nasdaq Stats May 252023

 Things to Know Today 

  1. DirecTV struck a deal with EverPass Media to commercially provide the National Football League's (NFL) “Sunday Ticket” package to bars and restaurants. (CNBC)
  2. The Ukrainian government announced it will work with Palantir Technologies (PLTR) to catalog and assess damages to its buildings and infrastructure. (MarketWatch)
  3. Nvidia stock surged after predicting a "giant record year."
  4. Put traders did not hold back after Snowflake's dismal forecast.
  5. How this sports stock doubled bears' money.

Earnings May 252023

Unusual Options Activity May 252023

Gold, Oil Prices Log Steep Daily Losses

Oil prices snapped a three-day win streak on Thursday, after the U.S. dollar strengthened, and Russian Deputy Prime Minister Alexander Novak noted he did not expect the Organization of the Petroleum Exporting Countries and their allies (OPEC+) to deliver a production cut in June. July-dated crude shed $2.51, or 3.4%, to close at $71.83 per barrel.

Gold prices settled lower as well, marking their fourth consecutive session in the red and lowest close since March 21 due to rising Treasury yields. June-dated gold shed $20.90, or 1.1%, to close at $1,943.70 an ounce.

Published on May 25, 2023 at 3:23 PM
  • The Week Ahead
Published on May 25, 2023 at 2:57 PM
  • Buzz Stocks
  • Intraday Option Activity

The retail sector has been in focus over the past week, with several big names hitting up the earnings confessionalBest Buy Co Inc (NYSE:BBY), Burlington Stores Inc (NYSE:BURL), and Dollar Tree Inc (NASDAQ:DLTR) are among the retailers making headlines today, and below we will further explore what is driving their price action.

BBY Brushes Off Revenue Miss

BBY is up 2.3% at $70.72 at last check, after the tech retailer delivered a first-quarter earnings beat, though revenue missed estimates. The company said weaker demand stemming from high inflation should ease by the end of the year. Despite bouncing off yesterday's 2023 low of $68.45, shares are still facing pressure at their 20-day moving average, and are 12.2% lower in 2023.

Options volume is today running at five times the intraday average, with 13,000 calls and 19,000 puts exchanged so far today. The most popular contract by far is the June 67.50 put.

BURL Eyeing 4th Loss in 5 Sessions

Burlington stock was last seen down 2.7% at $162.29, following the department store's top- and bottom-line miss for the first quarter. The shares earlier slipped to $159.59 their lowest level so far this year, and are on track to mark their fourth daily loss in five sessions. Over the last three months, BURL has shed 26.5%.

It's worthy noting the security's Schaeffer's Volatility Scorecard (SVS) ranks at a 92 out of 100, meaning it has exceeded option traders' volatility expectations during the past year.

Fresh 1-Year Low for DLTR

A first-quarter earnings miss is also weighing on Dollar Tree stock, which is down 9.5% at $140.53 at last check. The discount retailer cut its 2023 profit forecast to boot, amid cooling demand for higher-margin discretionary goods. The security earlier hit a fresh one-year low of $129.25, and is looking to close below the 80-day moving average for the first time since April, as well as notch its worst single-day percentage drop since August 2022.

Options traders are chiming in, with 24,000 calls and 27,000 puts trades so far, or eight times the volume that is typically seen at this point. Positions are currently being opened at both the August 125 put and 150 call, which are also the two most popular contracts.

Published on May 25, 2023 at 11:49 AM
  • Midday Market Check

Begin the New Year With Schaeffer's 7 FREE 2022 Stock Picks!



MORE | MARKETstories

A New Era Of Investing...
This smart tech can help traders 'accelerate' their retirement goals.
Nasdaq Eyes Weekly Win; Dow, SPX Fall on Debt Ceiling Fatigue
Multiple meetings between U.S. lawmakers failed to solve the default crisis
Gap Stock Breaks Higher on Surprise Quarterly Profit
Restructuring efforts and easing supply chain pressures helped the apparel retailer
A New Era Of Investing...
This smart tech can help traders 'accelerate' their retirement goals.