Comcast Corporation (CMCSA) is a media company operating a wide range of communications and broadcasting businesses. The company’s stock is currently trading around $62.00 in a 52 week range of $50.01-$64.99. CMCSA is set to report their most recent quarterly earnings tomorrow morning before the market open. Based on the price action and historical earnings record in CMCSA I think it is setting up well for a bullish options play ahead of the report.
CMCSA has rallied 9 of the past 12 quarters on earnings day with an average move of 2.85%. The stock is also higher 9 of 12 times from earnings day to expiry. The stock is also setting up well on a chart. The stock is trading well above the Ichimoku Cloud and has been in bullish territory since breaking higher earlier this month. The stock is moderately higher today but with shares trading well above the cloud and the historical movement record showing a clear bullish patter I would want to get long CMCSA via weekly options.
Using the options market we can calculate an implied move of $2.30 by Friday’s close. With stock at current levels that would give me an upside target of $64.30 by Friday. Using this level I will set up an options spread.
Trade: Buying the CMCSA Oct 30th Weekly 63-64 Call Spreads for $0.30
Risk: $30 per 1 lot
Reward: $70 per 1 lot
Breakeven: $63.30
With this trade I have a better than 2-1 reward to risk ratio and a max profit if the stock trades to the calculated measured move target.
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