How is Zillow Group, Inc. (Z) Looking Ahead of Earnings?

Zillow Group, Inc. (Z) is an online real estate services business that seeks to connect consumers with professionals online. The company’s stock is currently trading around $96.90 in a 52 week range of $81.07-$164.90. The stock has been relatively weak this year with shares falling around 6.8% year to date. Z is set to report earnings after the bell today and the stock is looking weak ahead of the release. Z stock is lower on the session by around 1.8% ahead of the report.

The stock is likely under pressure due to Zillow’s dismal historical performance record on earnings day. Over the past 12 quarters Z has sold off on earnings day 8 times with an average move of 8.08%. The stock has also sold of 8 times in 12 quarters from earnings day to options expiration. Z also looks very weak on a chart. The stock is trading well below the Ichimoku Cloud on the daily bar, and both major moving averages are well below the cloud. With a bearish historical performance record and a weak technical setup it is difficult to justify anything but a short in Z.

The options market is currently implying a move of around $7.00 in Z by this Friday’s close giving us a downside target around $89.90.

Potential Bearish Earnings Trade: Buying the Z May 94-90-86 Put Fly for $0.65
Risk: $65 per 1 lot
Reward: $335 per 1 lot
Breakeven: $93.35 and $86.65

This trade offers a better than 5-1 reward to risk setup and profits near its maximum at the measured move target.