3m (MMM) - Earnings

MMM reported earnings today.
Not to say I told you so...but they guided down for q4.
However, CCI was surprised that they also missed q3 numbers.  The stock pulled back to $77.

From a trading perspective, the weekly $80 calls plunged on this news.  Hence the $80 weekly calls sold a few days ago plunged towards zero making that a profitable hedge. 

As mentioned above, CCI was not surprised to see MMM lower expectations (they seem to do that a lot) but the q3 miss was surprising and concerning to me.  I looked at just closing the position, but decided that the volatility was probably not out of this stock yet, and even lower expectations of $6 EPS this year should provide some floor for the  stock.

So we rolled the profitable weekly option position out and down.  Specifically we covered the Oct $28 call and sold the Nov $75 call for $3.30.   Scenarios if held to expiration are
- Stock falls below $75 and CCI remains long one lot of shares.  Those shares were purchased at $80 but we will have collected nearly $7.00 in option premium so the effective break even is down to $73.
- Stock stays over $75.  The stock will be called away at $75, but having collected $7.00 in premiums the portfolio would have made $2/share on the trade.

However, as the market digests these results, there is potential additional volatility in the stock so CCI may trade out of this position before expiration.