MDT Earnings Beats Estimates for May 24

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MDT Earnings Beats Estimates for May 24

Medtronic PLC (MDT) just reported earnings on May 24, 2018, before the market opened. Earnings Per Share (EPS) was reported at $1.42, after analysts had expected $1.39 per share. As a result, MDT opened up +1.3%, and closed for the day up +2.3% at 87.13.

Price Volatility Against Expectations

Ahead of earnings, option traders were expecting a ± 3.1% move for this date, so the earnings move of +2.3%represents an undersized move against the market. MDT has only experienced 3 larger-than-expected earnings moves in the last 12 quarters.

Earnings Price Patterns

The MarketChameleon earnings price pattern has detected two notable historical trends for after earnings.
1 Day After Earnings:For each of the last 5 quarters, MDT stock price has gone down on the day following earnings. It has had an average loss of -1.1% during that span.
3 Days After Earnings:For each of the last 4 quarters, the stock price has gone down in the 3 days following earnings. Over that period, it has an average loss of -2.0%.

Earnings Option Strategies

MarketChameleon's option strategy analysis shows that selling out-of-the-money puts one day after earnings and buying them back one week after earnings had 82% winning occurrences, for an average gain of +27.4%. Additionally, selling at-the-money straddles resulted in 64% winning occurrences, for an average return of +4.0%.
Stock and option trading involves risk may not be suitable for all investors. Examples contained within this newsletter are simulated and may have limitations. Average returns and occurrences are calculated from snapshots of market mid-point prices and were not actually executed, so they do not reflect actual trades, fees, or execution costs. This newsletter is for informational purposes only, and is not intended to be a recommendation to buy or sell any security. Neither MarketChameleon nor any other party makes warranties regarding results from its usage. Past performance does not guarantee future results. Please consult a financial advisor before executing any trades.
Note: selling options can result in losses of greater than 100%. Average returns from selling options is calculated based on net change in value against the initial theoretical option value. Prior to buying or selling an option, you should read the Options Clearing Corporation's Characteristics and Risks of Options.

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