Trade Alert: New Buy in Autodesk

After yesterday’s closing bell, one company on our watch list reported earnings that triggered a new trade for us today.

The company, Autodesk Inc. (Nasdaq: ADSK), reported earnings that topped analysts’ expectations by more than 30%.

Autodesk is best known for its computer software programs, which are used in several major industries: architecture, engineering, construction, manufacturing, etc. The company is now transitioning to cloud computing services to keep up with the times — and analysts weren’t quite sure what to expect.

But yesterday’s results were better than they anticipated: Autodesk reported a loss of $0.16 per share — but analysts had expected a loss of $0.24 per share.

In turn, the stock soared more than 10%, triggering a new trade for us.

Our decade worth of historical research reveals this scenario has occurred three times — and in those instances, the stock gained 4%, 5% and 8% in just three weeks. Since we use options, our returns have the potential to be much greater than that.

So let’s grab the June 16, 2017 $110 call option to benefit from this earnings drift.

Here’s your action to take:

Action to Take
Buy Action to Take
Stock: Autodesk Inc. (ADSK)
Option Type: Call Option
Expiration: Jun-16-2017
Strike Price: $110
Option Symbol: ADSK170616C00110000
Action: Buy to Open
Order Type: Limit Order
Duration: GTC (Good ‘Til Canceled)
Limit Price: $5.50
Trade Deadline: If your order is not filled by my next update, I will update you on the trade.
Note: Do not place a market order. Set the limit order at $5.50.
Once this order is filled, place the following order:
Sell Action to Take
Stock: Autodesk Inc. (ADSK)
Option Type: Call Option
Expiration: Jun-16-2017
Strike Price: $110
Option Symbol: ADSK170616C00110000
Action: Sell to Close Half
Order Type: Limit Order
Duration: GTC (Good ‘Til Canceled)
Limit Price: Whatever nets you a 50% gain.
Trade Deadline: Keep this order open until it is filled or canceled.
Note: This second order will allow us to collect a 50% gain on half of our position in the event that a quick move happens before I can get a trade alert out to you.

That’s all for today. Have a great weekend.

Regards,

Chad Shoop, CMT
Editor, Earnings Drift Alert