Adobe System’s (ADBE) reports their fiscal Q4 results tonight after the close. The options marker is implying about a 5.3% one day move tomorrow, which is a tad rich to the 4 qtr average one day move of 4.9% but in line with the 10 year average. With the stock at $105, the Dec 16th (tomo) 105 straddle (the call premium + the put premium) is offered at $5.50, if you bought that, and thus the implied move you would need a rally above $110.60, or a decline below $99.40 by tomorrow’s close to just break-even.
Taking a quick gander at the one year chart, the implied move lines up fairly well with technical resistance at the recent all time highs, and support just above last month’s lows near $98.50:
Much like ORCL (previewed earlier), ADBE has run higher into its results, but ADBE stock is just a tad squeezier than ORCL, prone to post earnings volatility that is not always reflected in the one day closing move.
For instance, following the company’s Q1 report in March, the stock closed up 3.85%. But that does not tell the whole story because it opened up 9% to a new (then) all time high, only finding sellers throughout the day and closing very near its low of the session:
That kind of move is important because any bullish option strategies had their home-run on the open, and could have closed, even if the historical move on that earnings doesn’t reflect it (from the closing price). On the flipside, short premium strategies would have required some strong resolve on the open to avoid closing for a big loss, before ultimately being proven somewhat right.