Trade Alert: Two New Buys

As I mentioned last week, earnings season is heating up for us, giving us plenty of profit opportunities.

In fact, today I have two new trades for you.

Our first trade is in United Rentals Inc. (NYSE: URI) — which was triggered for us a couple of weeks ago.

See, two weeks ago, United Rentals announced earnings that topped expectations by 16%, causing the stock to jump 8%.

Our historical analysis tells us that this type of earnings report, followed by that type of increase, means our best buying opportunity takes place two weeks afterward. And to see the best profits, we want to hold call options for almost two months.

This scenario played out 10 times in the last 10 years, and in only two of those times did it experience a loss. The other eight times saw gains of 1.5%, 4%, 4.5%, 9%, 14%, 22%, 87%, and, last November, we played this same drift for a gain of 51% on the first half and 299% on the second half!

Considering our track record with United Rentals, I’m excited about the possible gains that this rental company has in store for us today.

Here’s your action to take:

Action to Take
Buy Action to Take
Stock: United Rentals Inc. (URI)
Option Type: Call Option
Expiration: Jun-16-2017
Strike Price: $125
Option Symbol: URI170616C00125000
Action: Buy to Open
Order Type: Limit Order
Duration: GTC (Good ‘Til Canceled)
Limit Price: $10.70
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 $10.70.
Once this order is filled, place the following order:
Sell Action to Take
Stock: United Rentals Inc. (URI)
Option Type: Call Option
Expiration: Jun-16-2017
Strike Price: $125
Option Symbol: URI170616C00125000
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.

Today’s Second Trade: AKAM

Our second trade for you is in Akamai Technologies Inc. (Nasdaq: AKAM).

The company reported earnings this morning that surpassed Wall Street expectations, but it still disappointed overall, sending shares down more than 6% before the market opened today.

Based on our historical research, we know we want to follow the market and grab put options today and hold them for about two months.

This scenario showed up seven times in our data, showing declines of 2% to 15%, and the stock only rose in one of those occasions. This trend actually came up during the backtest we did before we launched the beta version you are receiving now, where it captured a 50% gain on the first half, and it went on to lock in a 146% gain on the second half of the trade.

So let’s grab the May put options to benefit.

Here’s your action to take:

Action to Take
Buy Action to Take
Stock: Akamai Technologies Inc. (AKAM)
Option Type: Put Option
Expiration: May-19-2017
Strike Price: $65
Option Symbol: AKAM170519P00065000
Action: Buy to Open
Order Type: Limit Order
Duration: GTC (Good ‘Til Canceled)
Limit Price: $6.20
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 $6.20.
Once this order is filled, place the following order:
Sell Action to Take
Stock: Akamai Technologies Inc. (AKAM)
Option Type: Put Option
Expiration: May-19-2017
Strike Price: $65
Option Symbol: AKAM170519P00065000
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.

As always, please let me know if you have any questions about these trades. You can reach me at earningsdrift@banyanhill.com.

Until next time, good trading…

Jeff Opdyke
Editor, Earnings Drift Alert