Trader Bets Big on $BSX Earnings Over a Month in Advance, Scoring Over 200% Profit
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The US Q1 earnings season is in full swing, with Tesla ($TSLA) and Meta ($META) experiencing significant volatility following their earnings announcements. Betting on short-term volatility is a common profit-making strategy during earnings season. Additionally, some traders position themselves ahead of time in the direction they foresee, often reaping substantial profits after navigating through the market's fluctuations.
Medical device company Boston Scientific ($BSX) announced its Q1 earnings in the pre-market on Wednesday, beating expectations and propelling its stock price to soar. More than a month prior to $BSX's earnings announcement, traders had already positioned themselves in anticipation.
According to TradingFlow data, on 15th March, shortly after market open, traders began to enter the fray. A large trade of 3.1k contracts, expiring on 17th May with a strike price of $67.5, was executed, with the contracts trading near the midpoint at approximately $2.10, indicating a 'mid' execution.
(Source: TradingFlow.com)
Referring to the open interest (OI) data (see chart below) provides more clues about this trade. On 15th March, the initial OI value was 1072, and the aforementioned trade involved a volume of 3.1k, indicating it was likely a new position being opened. The OI for this call option increased by 3120 on the same day, indicating it was executed at the ask price, classified as a 'mid' execution on the order book.
(Source: TradingFlow.com)
Judging from the change in open interest (OI) for this call option (see chart below), even amid fluctuations, and possibly retracements in contract prices from 15th March until the eve of $BSX's earnings day (23rd April), traders held their positions without liquidating.
(Source: TradingFlow.com)
On 4th April, the contract price surged to a peak of $3.3 (see chart below). On 22nd April, just before $BSX announced its earnings, a large call option with a volume of 5.02k flowed in, while the contract price had fallen from its previous high of $3.3 to around $2.8. As the contract was executed near the midpoint of the bid-ask spread, it was classified as a 'mid' execution. Following the aforementioned logic, it's more likely that the transaction was executed at the ask price. You can explore the data analysis further on TradingFlow.
(Source: TradingFlow.com)
On 24th April, $BSX announced its latest quarterly earnings. Q1 performance exceeded Wall Street expectations, with earnings per share of $0.56, surpassing FactSet's forecast of $0.51. Additionally, $BSX raised its full-year 2024 outlook, adjusting earnings per share from the previous range of $2.23 - $2.27 to $2.29 - $2.34, surpassing the market's general expectation of $2.25.
Following the earnings announcement, $BSX stock price surged, reaching a high of $74.39 during Wednesday's trading session, up nearly 7.6%. By the close, the gains retreated to 5.68%, but the company's stock still hit a historical high.
(Source: Moomoo)
Meanwhile, the call option contracts that the aforementioned trader wagered on reached a peak of $7.10 during intraday trading. Considering only the transaction volume of 3.1k contracts (with a cost of approximately $2.10), compared to the highest contract price, the trader's profit amounted to approximately 238%.
(Source: Moomoo)
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Disclaimer: This article is for informational purposes only and does not constitute investment advice. Before making any financial investment decisions, please ensure you thoroughly understand all aspects of the information and conduct your own research.
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