U.S. equities were under pressure on Friday, as investors got spooked by a combination of a festering situation in many emerging market currencies as well as dimming hopes on the trade front. President Trump’s administration is set to enact fresh tariffs on another $200 billion in Chinese imports.
And late-in-the-day negotiations with Canada to join a joint U.S.-Mexico trade deal were imperiled by comments Trump reportedly made to Bloomberg about not making any compromises.
After a record-setting week, the major averages pulled back from recent all-time highs. That has created some short-side opportunities in a number of large-cap stocks. Here are four large-cap stocks that are looking ripe for put option plays:
Large-Cap Stocks to Play: Disney (DIS)
Disney (NYSE:DIS) shares look set to fall below a critical month-long support level near $112, setting up a violation of the 50-day moving average and a decline back to the 200-day moving average, which hasn’t been tested since June. Investors are looking to book profits now that the excitement over its acquisition of Twenty-First Century Fox (NASDAQ:FOXA) has turned into apprehension about execution risk. Edge Pro subscribers have established a position in the Sept $112 puts.
The company will next report results on Nov. 6, after the close. Analysts are looking for earnings of $1.31-per-share on revenues of $13.8 billion. When the company last reported on Aug. 7, earnings of $1.87 missed estimates by 8 cents on a 7% rise in revenues.
Large-Cap Stocks to Play: Cola-Cola (KO)
Coca-Cola (NYSE:KO) shares are under serious pressure, dropping more than 5% from the double-top high set during the month to slice below its 50-day moving average to close in on its 200-day average near $44. The company continues to struggle with a shift in consumer tastes away from sugary sodas toward more healthful options like flavored sparkling water. Edge Pro subscribers are enjoying a near 50% gain in their Sept $45 KO puts.
The company will next report results on Oct. 24, before the bell. Analysts are looking for earnings of 55-cents-per-share on revenues of $8 billion. When the company last reported on July 25, earnings of 61 cents per share beat estimates by a penny on an 8.3% decline in revenues.
Large-Cap Stocks to Play: Boeing (BA)
Boeing (NYSE:BA) shares are on the front lines of the trade spat with China, representing one of America’s most critical export categories (commercial aircraft). Uncertainty over the fate of tit-for-tat tariffs has kept shares rangebound since January. But watch for a breakdown here below the 200-day moving average near $330, which hasn’t been violated since 2016. The Sept $340 puts are looking attractive here, with a $5.15/$5.30 bid ask spread.
The company will next report results on Oct. 24, before the bell. Analysts are looking for earnings of $3.59 on revenues of $24.8 billion. When the company last reported on July 25, earnings of $3.33-per-share beat estimates by 8 cents on a 5.2% rise in revenues.
Large-Cap Stocks to Play: Chevron (CVX)
CVX shares are dropping back below their 200-day moving average, succumbing to selling pressure that materialized two weeks ago and risking a departure from the four-month consolidation range that followed a double-top test of the January high. I’d look at a position in the Sept $116 puts as a bet on a further breakdown here.
The company will next report results on Oct. 26, before the bell. Analysts are looking for earnings of $2.28-per-share on revenues of $43.5 billion. When the company last reported on July 27, earnings of $1.78 missed estimates by 31 cents on a 22.5% rise in revenues.
Anthony Mirhaydari is the founder of the Edge (ETFs) and Edge Pro (Options) investment advisory newsletters. Free two- and four-week trial offers have been extended to InvestorPlace readers.
