Monday 9/21/20: COST, NKE, UPS, TSLA

Hi everyone,

These are my thoughts and trading ideas for the upcoming week.

• Costco Earnings: COST will be reporting on 9/24. The stock is currently trading at $336.99 down from its $363.67 high on 9/3. If the overall market sentiment permits, I am expecting COST to rally back up. Potential play: Short-term OTM call options below $360 that could be flipped prior to Thursday’s earnings release.

  UBS Analyst Michael Lasser: "With all the current focus on membership programs, it's important to keep in mind that COST had consummated the consumer subscription model long before it came in vogue. The effectiveness of this model should be on display again when it releases its full 4Q. It already reported a 14.1% core comp for the Q. Importantly, it generated positive traffic growth over the last two months, which hasn't been common in retail. We believe that a good portion of its traffic growth was driven by new members, and forecast $1,124 mm in MFI (consensus of $1,111 mm)" [Seeking Alpha].

• Nike Earnings: Nike will be reporting on 9/22. The stock is currently trading at $115.25 down from $120.48 earlier in the previous week. Similar to Costco, I am expecting the earnings momentum run-up to resume. Potential play: Short-term OTM call options below $120 that could be flipped prior to Tuesday’s earnings release.

  Nike has been focused on its own direct-to-consumer offerings. Raymond James analysts note the continued demand for the company’s merchandise, helped in part by the ESPN documentary “The Last Dance,” which sparked even greater interest in Jordan-brand sneakers. Moreover, Nike continues to invest in its digital channels, with more customers turning to e-commerce during COVID-19 [Market Watch].

• UPS Earnings: UPS will be reporting on 10/22. Continued big tech weakness, the strong Fedex earnings, and continued overall excited about the shipping sector going into the holiday season might be sufficient catalysts for an upcoming earnings run-up. It might be advised to cost-average into a full position (looking at Nov OTM call options) on red days over the next two weeks since the earnings release date is still further out.

• TSLA Reminder: Tesla's 2020 Annual Meeting of Stockholders and Battery Day will be held on Tuesday, September 22, 2020, at 1:30 PM Pacific Time. I am looking to potentially swing-trade shares since option premiums are too inflated.

• Hedging Idea: QQQ $260 October puts to balance positions in case big tech continues to correct / show weakness.

Enjoy the rest of your Sunday!

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This is not financial advise. All opinions expressed in this newsletter are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security or investment product.