Earnings season is heating up, and I’ve been going through the setups for next week’s big names. After digging into the charts and pricing out the probabilities, a few trades stood out to me — and a few others, not so much.
Let’s start with the ones I like.
Alibaba (BABA) is at the top of my list. China’s been showing some bullish momentum since Chinese New Year, and historically, that post-holiday window brings positive movement for a few months.
If China’s lifting animal spirits, I want to be bullish on China. I’m already long Alibaba, and with the stock trading at attractive levels, I see more upside ahead. I’ll be looking at option strategies that align with the expected move here.
DraftKings (DKNG) is another one I’m bullish on.
With the Super Bowl this weekend and March Madness coming up, the timing couldn’t be better for a strong Q4 earnings report. The sports betting sector has been on fire, and DraftKings is right in the middle of it.
The market is pricing in some solid growth, and I’ll be looking at ratio spreads to capitalize on the volatility. Between football and basketball, there’s no shortage of catalysts.
Now, let’s talk about what I’m avoiding.
Super Micro Computer (SMCI) was having a monster year into March 2024, but that kind of momentum can fade fast. The recent price action looks terrible, and I’m not seeing any setups that make sense.
When a stock runs this hot, it’s easy to get caught chasing, but the risk-to-reward just isn’t there for me. The expected move isn’t offering enough to justify the risk, so I’m staying on the sidelines.
Beyond these, I’m also watching Coinbase (COIN) as a proxy for Bitcoin, and Airbnb (ABNB) has some interesting setups as well. But my main focus will be on Alibaba and DraftKings — those are the trades that make the most sense to me right now.
At the end of the day, it’s all about finding trades where the math lines up and the probabilities are in my favor. Not every stock is worth trading during earnings season, and sometimes the best move is to sit out. That’s exactly why I’m picking my spots carefully this week.
I’ll see you in the markets.
Chris Pulver
Chris Pulver Trading
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*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.
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