Apple Headlines Earnings Calendar With Chip Titan AMD, Amgen Also Set To Report – Investor's Business Daily
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Apple (AAPL) headlines earnings next week, along with several chip companies. Fellow Dow Jones Industrial Average component Amgen (AMGN) is also a notable name on the earnings calendar with results due Tuesday.
Chip companies Advanced Micro Devices (AMD), Axcelis Technologies (ACLS), FormFactor (FORM) and Microchip Technology (MCHP) dot next week’s earnings calendar as well.
AMD stock is below its 50-and 200-day lines but continues to hold a Relative Strength Rating of 92. The stock has come off the year’s high of 132.83, but still has an impressive 47% gain year to date. The maker of graphic processors, visualization technologies and advanced AI-capable chips coveted by data centers and cloud platform providers ranks fourth in the fabless semiconductor group.
AMD reports its third-quarter results Tuesday after market close. The company gave sales guidance of $5.7 billion for the third quarter, in line with FactSet analysts’ target.
The stock market remains in correction. A strong report from Dow giant Microsoft (MSFT) has not been enough to offset warning signs from Meta (META) and Google parent Alphabet (GOOGL) as Treasury yields hover near multiyear highs.
Amid the market weakness, Apple faces tepid sales from iPhone 15 handsets, which went on sale Sept. 12 as it headed toward fiscal Q4 earnings. But a product launch Monday could skew things in the stock’s favor ahead of earnings. Analysts expect a new iMac desktop computer featuring the M3 processor chip. The Cupertino, Calif., behemoth also raised prices for some of its subscription-based services recently, such as Apple TV and Apple News.
The iPhone maker has seen service revenue hit all-time highs for two quarters in a row after it crossed an installed base of 2 billion active users in its fiscal first quarter, which ended last December. In its third quarter, service revenue surged as paid subscriptions crossed 1 billion.
Apple stock has been turned away from its 50-day moving average twice since September and is now breaking the 200-day line, according to IBD MarketSmith chart analysis. The company is set to report its results on Thursday after the close.
Analysts polled by FactSet expect sales to decline slightly from the prior year to $89.3 billion, but they see earnings per share picking up 8% to $1.39, accelerating from a 5% increase in the June-ended quarter.
Dow Jones health care component Amgen reports on Tuesday before the open.
FactSet analysts see sales of $6.9 billion, up 4%, with earnings per share of $4.68, nearly flat from a year ago. Amgen stock has been pulling back but fell below a cup-with-handle entry at 268.24, and the 50-day line, Friday. The Dow Jones leader has a portfolio and pipeline of cancer treatments.
Computer peripherals and hardware provider Super Micro Computer (SMCI) is also up next week on Wednesday with microcontroller device maker Microchip Technology reporting Thursday.
A basic options trading strategy around earnings — using call options — allows you to buy a stock at a predetermined price without taking a lot of risk. Here’s how the options trading strategy works and what a call option trade recently looked like for Amgen, a noteworthy stock in the current earnings calendar.
First, identify top-rated stocks with a relatively good chart. With the market in correction, those are not that easy to find. But some might be setting up, showing signs of forming early-stage bases. Others already might have broken out and may be getting support at their 10-week lines after a strong shakeout.
And a few might be trading tightly near highs and refusing to give up much ground. That would be an encouraging sign of limited overhead supply.
A call option is a bullish bet on a stock. Put options are bearish bets. One call option contract gives the holder the right to buy 100 shares of a stock at a specified price, known as the strike price and expires on a particular date in the future.
Once you’ve identified an earnings setup for a call option, check strike prices with your online trading platform, or at cboe.com. Make sure the option is liquid, with a relatively tight spread between the bid and ask.
Look for a strike price just above the underlying stock price — that’s out of the money — and check the premium. Ideally, the premium should not exceed 4% of the underlying stock price at the time. In some cases, an in-the-money or at-the-money strike price is OK as long as the premium isn’t too expensive.
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Choose an expiration date that fits your risk objective. But keep in mind that time is money in the options market. Near-term expiration dates will have cheaper premiums than those further out. Buying time in the options market comes at a higher cost.
A call option for Amgen with a strike price of 262.50 and a Nov. 10 expiration date cost $6.45 per contract Friday. Based on the underlying price of the stock of 262.21, the premium was 2.5% of the stock price.
One contract gave the holder the right to buy 100 shares of AMGN stock at 262.50 per share. The most that investors could lose was $645 — the amount paid for the 100-share contract.
Keep in mind this is not a trade for a small portfolio. If the option is exercised, buying 100 shares of AMGN would cost $26,250.
Another tradable option in the chip sector might be FormFactor (FORM), which reports on Wednesday after the close. FormFactor provides semiconductor testing and measurement tools.
An out-of-the-money call option with a strike price of 35 and Nov. 17 expiration cost $1.03 Friday, which is 3.1% of the underlying stock price when FORM was trading at 32.76.
Bear in mind that this is not as liquid a name as Amgen. To break even, FORM stock would have to climb to 36.03 (strike price of 35 plus $1.03 premium per contract).
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