Tiffany & Co ( TIF NYSE ) is set to report their most recent quarterly earnings on Friday March 17th before the market open. The company’s stock is currently trading around $71.00 ahead of the number. Shares of TIF NYSE have been week this year with prices falling just over 7% year to date. With earnings announcements often leading to large moves traders who have positions in TIF NYSE or are looking to speculate on this movement need to have a thoughtful analysis method in place before taking a trade. We will break down the historical movement, implied movement, and technical setup in TIF NYSE as it stood the day before earnings. This same method can be used to analyze any stock ahead of a catalyst event and can help traders in selecting trades and hedges with a more informed process. The analysis will cover historical movement data over multiple time frames and calculating expected movements across different expirations.
First, a trader needs to have an understanding of how the stock has moved in the past on earnings. Catalyst movement is very different from underlying trend and it is important to know how the stock has behaved on past earnings events. When looking at historical data in TIF NYSE we can see that on earnings day the stock has rallied 8 of the past 12 quarters with an average move of 5.35%. However, if we look at the historical movement from earnings day to the nearest options expiration we can see that over that time frame TIF was actually more likely to sell off. Over the past 12 quarters TIF NYSE has sold off from earnings to expiry 8 times with an average move of around 5.35%. Knowing this tells a trader that shares of TIF are more likely to rally on earnings day but then likely to sell off after. With this piece of information a trader can time their exits much better in both long and short speculative trades. This trend info also helps with set ups after earnings.
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