Trade Plan: SELL (at market close)
Here is what happened:
(click to expand)
Commentary: Winner or Loser? You decide. Read the jump report first. Adtran was scheduled to release after market close but waited until 9:20 PM. Why so late? Because they knew their forward guidance was going to suck, and the stock would tank when revealed… so they waited until the conference call the next day. (held an hour AFTER market open). This way with the.05 cent EPS beat they would surly get a pop up first on the stock and perhaps understate the forward guidance in the call. When they opened the session to questions a savvy investor asked the CEO, specifically that question – what would sales be in the next 6 months. The CEO confirmed the rest of the year would be much softer on sales. Well you can guess what happened next. The stock tanked. 300,000 shares got sold in about 10 minutes and the price dropped below the previous days close and kept going south from there. The option trade (PUT) soared up 455% the following day. Trading is all about timing. Some StockJumpers who entered the day before stayed in and some got stopped. Some made a nice profit, others lost. It’s all part of the trading game even when you have good trajectory data.
The lesson here is if the release has some abnormal aspect to it (like this one did) its best to wait it out. For a lot of traders that very hard to do, but necessary. Also the reason we like jumpers that report AMC with the conference call that follows immediately is there is less opportunity to play games. Not to say we will never do BMO reporters, but the dynamic is different.
Jump Zone Profit: +13% or – 9.3%
(depending on your entry)