DKS Option Trade Idea: Here's How Earnings Could Produce Big-Time Profits | IBD

TL;DR

Consider buying a call option for Dick's Sporting Goods earnings, as the stock shows bullish signs and has a track record of beating estimates.

Transcript

foreign ERS for today's trade we're looking at a long call option play in Dick's Sporting Goods which is reporting earnings in four days so taking a look at the stock on Market Smith shares have been forming a rare yet powerful ascending base pattern ahead of its earnings on March 7th ascending base patterns are more likely to form in a strong stoc... Read More

Key Insights

• 💁 Dick's Sporting Goods is forming a rare and powerful ascending base pattern, indicating potential bullish momentum.
• 😥 The stock is currently below the buy point, presenting a buying opportunity for investors.
• 💦 Analysts expect a drop in earnings but an increase in sales for the company.
• ❓ Consider buying a call option with a March 10th expiration and a 129 strike price.
• 🤑 New options traders should practice with a virtual account before investing real money.
• 💓 Dick's Sporting Goods has a track record of beating earnings and sales estimates.
• 🍉 The recommended option strategy is a fairly simple one with a short-term expiration.

Questions & Answers

Q: Why is the ascending base pattern for Dick's Sporting Goods considered rare and powerful?

Ascending base patterns suggest strength in a stock within a weaker overall market. Each time the stock attempts to rally, it is held back by the market, indicating potential breakouts and strong upward momentum.

Q: How has Dick's Sporting Goods performed in terms of earnings and sales estimates?

The company has been on a winning streak, beating earnings and sales estimates for the past 10 consecutive quarters. While earnings are expected to drop YoY, sales estimates show a three percent increase.

Q: What is the recommended option strategy for Dick's Sporting Goods earnings?

Consider buying a call option with a March 10th expiration and a 129 strike price. This trade would cost around $5.50 per contract, with a maximum potential loss of $550 if the stock trades below $129 on expiration.

Q: What should investors new to options keep in mind?

New investors should practice with a virtual account before risking real money in options trading. It's important to remember that options are complex and can result in losing 100% or more of your investment.

Summary & Key Takeaways

• Dick's Sporting Goods is forming a strong ascending base pattern ahead of its earnings on March 7th.

• The stock is currently five percent below the buy point and shows bullish price action.

• Analysts expect earnings of 2.88 cents a share, a drop of 21% YoY, but sales estimate is up three percent YoY.