YETI Holdings, Inc. (YETI), Trending Stock Report

It is interesting that YETI Holdings, Inc. (YETI) showed up on our list of compressed stocks yesterday. YETI has a history of making big moves around two events: after a compression signal, as well as after an earnings announcement. YETI reports earnings before the open tomorrow and the options are relatively expensive. We don’t typically buy options that are juiced ahead of an earnings report. However, the median move after an earnings report is 25% (see page 3).

Typically, after one of those two events, YETI tends to make moves big enough to warrant option buying strategies at today’s prices, even when the market is not in the throes of meltdowns both here and abroad. Investors’ reactions to announcements in current market conditions may be exaggerated and that could work in our favor.

Yesterday was 2 days before YETI reports earnings. The expiration of the September 20th options is 32 trading days away. The table below illustrates the action in YETI over the past two years for the period 2 days before earnings, then 30 days after the earnings report, for a total of 32 days, which matches our trade (which you can get in today’s ODDS Online Daily Option Trade Idea report).

We then look at the options and get the upper and lower breakevens, and then calculate the percent move required for the trade to make a profit. That percentage is 17.6%.

The final step is to compare that breakeven percent to the size of the moves YETI stock makes during the relevant time frame. And as you can see, there was only one instance when the stock stood still so much that it failed to move beyond the breakeven percent.

That’s not to say the stock is certain to move big. But we do like those ODDS!!

YETI’s stock prices are compressed. That is very interesting when market volatility is so high. It could be that investors are waiting to hear the earnings report tomorrow morning before taking action. With YETI’s history in normal market conditions, investors may be underestimating the size of the moves YETI will make over the next few weeks. And that is an option buying situation.

To get the specific details and prices on today’s trade ideas, be sure to read today’s ODDS Online Daily Option Trade Idea.