Earnings – TataElxsi – Part 2

This is a follow up to my previous post on trading the earnings cycle with some info on $TataElxsi. 

$TataElxsi reported its quarterly earnings on Tuesday 08-Jan-2018 at 12;55pm. The options marketplace was pricing in an expected move across the earnings of ~ Rs. 70 in the stock based on the ATM straddle prices. This is what happened to the stock post earnings. 

$TATAELXSI stock price chart

The stock has moved in 25 point range in the full session post earnings as well as the next session. As noted in the previous post, the account of the demand for options collapsing, the implied volatility has collapsed. This coupled with almost no movement in the stock means the short volatility earnings trade worked like clockwork. 

As we get further into the earnings season, we’ll talk more about how these types of trades pan out. not all trades work as smoothly as this did.