After the big dip in 2018, $EA has been a solid stock to long this year. It opened the year around $77 and touched $108. BUT $EA employees and investors got shitfaced on the 4th of July and anyone holding calls got cucked. I had a small position in puts that could have been 10 baggers but I sold on the 3rd before the fireworks.
On to the details… Fundamentally, I don’t have much faith in $EA. Analysts are projecting low revenue and earnings growth in the future. $EA also doesn’t have impressive EBIT/EBITDA margins. Some obvious problems are rising A/R, reduced plowback into investments, and falling FCFs. Without a solid earnings surprise, $EA won’t last trading in the $90s.
The TA for $EA is also bearish. The stock has been trading in three notable channels this year. Key price levels are $91, $94, $99, and $103. These are all respective support and resistance levels for different time periods. Early this month, $EA tested the $103 resistance level and got rejected hard. $EA quickly tanked and tested the $91 support level to bounce up a bit. Short term, we can see $EA forming a rising wedge, which is bearish. I expect $EA to consolidate for a while. The stock will probably attempt an upward breakout this week, get rejected, and then test the $91 support level again. Other technical indicators are all pointing down. See charts below.
I suggest monthly $88 puts. Please comment your opinion.
Disclaimer: Consult your financial professional before making any investment decision.