Dear Bottarelli Research Member,
As you know, our other earnings play for today was American Express (AXP – NYSE), which reported a mixed-bag report. Although AXP reported a 13% increase in Q3 profits, that didn’t stop analysts from downgrading the stock. As a result, shares of AXP are now in a battle right at their support level at $45.00.
Because of this, we have to maintain both sides of our AXP 45/46 Earnings Strangle until we get some directional clarity. For example, if AXP bounces at $45 support and moves past $45.70 (or so), the play would be to sell our puts and hold our calls. Conversely, if AXP fails to hold the line at $45 and moves to a new low of the day, the play would be to sell our calls and hold our puts. As is stands, we can still do well with this play but we just have to pick the right direction to ride. Until we know the answer, hold both sides until further notice.
And as always…
Lock and load!