How I doubled my money on DDD earnings

check detailed Report that Stockguy22 did on 3D Printing stocks that Stockguy22 Bull and Bear Report subscribers received on March 24th well before DDD and SSYS popped :

http://stockguy22.com/2013/04/23/3d-printing-stocks/

Just trading DDD and SSYS positions, Stockguy22 has also done well along with Stockdarts , as of May 3rd  locked up profits on 1/2 of DDD and SSYS for 36.07% and 14.04% avg returns . Plans  to add back the portions sold on any summer dips but plans to keep 1/2 longer term . You can read in  detailed report above: By the way members received the DDD SSYS stock Buys and Sells in REAL-TIME.

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The following is a trade review from our Stockguy 22 Bull/Bear Report, a weekly newsletter that is filled with great trade ideas from several Stockguy22.com traders.

Once again, most of our earnings plays were successful last week. While we had nicer gains in some of the other plays, I’d like to go over our plays in 3d Systems since it is a nice example of a couple of different ways to play an earnings report.

a)the overnight vol sell – Perhaps because of the discrepancy between its intraday and final moves, the current options appear a little bit overpriced compared to how it has typically finished the day after its recent reports. An at the money calendar spread would be a good way to try and take advantage of this.

DDD’s recent history showed that while it was averaging over 13% of movement throughout the day, it often faded the move as it had an average close of only about 6% from the prior close on earnings events. The options were pricing in a move of over 10%, so this looked like a good opportunity to sell some volatility. I chose to go with the 37 call calendar spread on this play which I purchase for a total debit of .30 per spread. DDD opened slightly down on the day of its report, and I closed half of the trade for .50 per spread for a gain of 66% on that portion of the trade. DDD rallied strongly that day as we can see on the chart showing impressive strength. While it didn’t really fade the move that day, it did give back a good portion of it the next day. I closed out the rest of the trade that day for .70 per spread which works out to 133% on that portion. The entire play made about 100%.

b) the post eps trade – Because DDD reports prior to the open, there won’t be an overnight delay between its report and the next session. DDD has a history of pretty good movement throughout the day of its report and should offer good trading opportunities for day traders. Expect the area around $36 to be considerable resistance. If price were to break past that level, $38 should come quickly. The $30 area should serve as good support on a negative report. The $28 area would also see strong demand if price were to continue downwards. Remember that DDD has a history of fading its extreme moves so keep an eye for reversals at key levels of support or resistance.

As I noted earlier, DDD has a history of running a bit after a report and that it could offer some great opportunities for day traders. This is a great example of how to play earnings without exposing yourself to the overnight risk inherent in traditional earnings plays. This is often a relatively easy way to get a clearly defined move on a stock as it typically has more volume and clearer directional momentum after an emotionally charged event like an earnings report. While it looked like DDD might breakdown at the open, it reversed strongly with a bullish engulfing candle and rallied up to the $36 level I had targeted in the newsletter. It flagged right at that level and once it cleared it, DDD basically stair-stepped higher throughout the day giving numerous opportunities for entries and exits for the active day trader. Not only did $38 come quickly, DDD actually exceeded it and provided a nice trended high the rest of the week as well for those that prefer swing trading.

If you have any questions or comments, feel free to contact me on twitter @stockdarts or in our great chat room if you are a stockguy22 member. If you aren’t a member, what are you waiting for?
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