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Watching GT Advanced Tech After the Bell

This stock tends to make big moves on earnings, so a straddle could be the way to play.
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A good day to be traveling. Normally all kinds of craziness will break out when I jump on a plane. Then again, I think everyone believes that. It's been a busy day, so I'm focused on only one name after the bell, and that is GT Advanced Technologies (GTAT).

This has been a big mover in the past, hitting a double-digit move intraday the last four earnings reports in a row, with three being higher and one lower. All of those reports, except one, exceeded the current implied move for this week or 13%. This certainly puts a small $13.50 or $14 straddle play on the plate, in my view. If the $14s can be had to $1.80, or the $13.50 at $1.90, then those look like trades worth the risk.

If I were going lottery here, then the August 8 $15 calls at $0.40 would be my choice. If would be an all-or-none trade with an upside target of $1.30, so a 3 to 1, which isn't the greatest for a lottery, but this one does have some history on its side.

The best trade has been the post-earnings follow-along trade: If the stock opens low, then down she'll go. If the stock opens higher, then you are a buyer. 

Over the past four reports, this strategy has had the potential to return 5% to 10% on an intraday basis. I would look to put a trailer on the position if it is 3.5% or more in the money and scale out, refusing to let it turn into a loser. I would only be willing to give the stock 3% against me. Therefore, I'm willing to risk 3% with the belief I have a 5% to 10% upside. Again, these are the ratios I want to see.

At the time of publication, Collins was long GTAT straddles.