Costco Wholesale (COST) just reported earnings on December 12, 2019, after the market closed. Earnings Per Share (EPS) was reported at $1.73, after analysts had expected $1.71 per share. Despite the results, COST opened down -0.9%, and closed for the day down -1.8% at 291.87. Since earnings was reported, the stock has traded in a range from 289.10 to 296.30.
Price Volatility Against Expectations
Ahead of earnings, option traders were expecting a ± 3.2% move for this date, so the earnings move of -1.8% represents an undersized move against the market. COST has experienced 5 larger-than-expected earnings moves in the last 12 quarters.
Earnings Price Patterns
3 Days After Earnings:For 9 of the last 12 quarters (75%), COST stock price has gone up in the 3 days following earnings. It has had an average gain of +0.6% during that span.
2 Weeks After Earnings:For 5 of the last 6 quarters (83%), the stock price has gone up in the 2 weeks following earnings. Over that period, it has an average gain of +4.1%.
Earnings Option Strategies
MarketChameleon's option strategy analysis
shows that selling one day after earnings and buying them back one week after earnings had 67%
winning occurrences, for an average gain of +25.2%
. Additionally, selling at-the-money straddles only resulted in 42%
winning occurrences, for an average return of -6.1%