Playing EA Earnings

Electronic Arts (EA – NYSE)

Monday, July 22, 2013

Tomorrow after the close, Electronic Arts (EA – NYSE) is set to report earnings.

If you’re not familiar with EA, that’s not surprising. After all, they appeal to the 20 to 35 demographic by offering a wide range of video games – including action-adventure, role playing, racing, and first-person shooter games.

But they’re most commonly known for their popular sports-based video games, which offer real-world sports leagues, players, events, and venues with arcade-style graphics.

Going into tomorrow’s earnings report, EA has been running pretty flat. For the last eight trading sessions, EA has been stuck in a range from $23.40 to $24.40, as you can see below.

This tight, $1.00 range leading into earnings indicates that EA could be setting up for the “Coiled Spring” effect. In other words, EA is ready to move higher or lower – but investors need to see a news catalyst before triggering the next big move. The longer the stock remains range-bound, the tighter the spring gets coiled. And then, when a news event (such as tomorrow’s earnings) is announced, the spring releases and the stock makes its big move.

The big question, of course, is which way EA will move. In Bottarelli Research Professional, Dan Levy just watched a customer buy 10,000 EA August 25 Calls. And then, this same customer also sold 20,000 EA August 26 Calls against it. This trade positions the customer to make money on a move up, but they definitely don’t think the stock is going to soar. Will this customer prove to be right? We’ll know the answer tomorrow after the close.

How to Trail “Sharp Paper:” As you may or may not know, Bottarelli Research Professional specializes in watching big order flow and trailing these monster-sized orders by recommending similar trades to an elite group of clients. The theory is, if someone is willing to commit hundreds of thousands of dollars on a trade, they must know something that others don’t. Although they’ll never come out and say what they know, watching their trading will reveal what they believe — and playing alongside them could lead to enormous returns.

If you’re interested in these types of trades, then you’re invited to join Bottarelli Research Professional today.

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Monday, 22 July 2013