Adobe Systems Incorporated (ADBE) is a software company that offers a range of products used by professionals in a number of industries. The company’s stock is currently trading around $79.20 in a 52 week range of $57.15-$80.30. The stock has been very strong this year with shares rallying 9% year to date. ADBE is expected to report their most recent quarterly earnings after the close today.
The stock has been strong on earnings day over the past 8 quarters. ADBE shares have rallied 6 of the past 8 quarters with an average move of 6.9%. Currently the options market is implying a move of around $4.15 by Friday’s close. This would imply an upside or downside move of around 5.2% by March expiration. ADBE is looking very strong on a chart as well with shares trading well above the Ichimoku cloud and value area for the month. With a strong historical bullish bias and a strong technical setup I will be looking to get long ADBE into earnings.
Potential Trade: Buying the ADBE Mar 82.5-85 Call Spreads for $0.50
Risk: $50 per 1 lot
Reward: $200 per 1 lot
Breakeven: $83.00
Since the historical movement is higher than the move implied this time I am willing to get a little more aggressive with my upside target.
Andrew Keene
President/Founder
KeeneOnTheMarket.com
