Flash Trade: Xerox (XRX)

By Jim Pearce • October 26, 2017

TRADE INSTRUCTIONS
Date: October 26, 2017
Name: Xerox Corp.
Symbol: XRX (NYSE)
Type: Open
Limit: Buy below $31

TRADE TARGETS
Holding Period: 14 days
Target Return: 10%
Target Price: $34.10
Stop Loss Level: $28

REMINDER: A Flash Trade is intended to profit from an extremely short-term condition that is not the product of our Rapid Profits Matrix. These trades are highly volatile and can move quickly. Managing entry and exit points is critical to maximizing returns, so the use of limit orders is highly recommended.

TRADE RATIONALE
Xerox reported third-quarter earnings today that were better than expected, but the stock is getting hammered this morning since revenues were off slightly. I believe that downdraft is being fueled by DCF (discounted cash flow) trading algorithms that use revenue growth as their primary valuation metric. However, Xerox also included forward guidance that actually raised next year’s earnings estimate, which suggests the company has a firm handle on its revenue stream. In short, this looks like a case of man versus the machine and I think this time the machine has it wrong.

NOTE: This stock is optionable, monthly only (XRX option chain)

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Dramatic License

10/26/17 ‐ 12:39pm ET October 26, 2017 at 12:39pm ET

Let’s have some fun with this one. 🙂 $31C 11/17 for .54 each.

Rick

10/26/17 ‐ 1:07pm ET October 26, 2017 at 1:07pm ET

Agree with the fun – I did the $30C 11/17 for $1.01.

Dramatic License

11/03/17 ‐ 3:46pm ET November 3, 2017 at 3:46pm ET

Since it’s basically all or nothing now, I went ahead and doubled down for an extra $50. Why not?

Anubis

10/27/17 ‐ 2:23pm ET October 27, 2017 at 2:23pm ET

I’m in @ $30.175

Thank you Jim.

DW

11/03/17 ‐ 2:41pm ET November 3, 2017 at 2:41pm ET

I noticed the stop loss on this article is set at $28. The stop loss on the SW Portfolio page is $29. Bummer I used the Portfolio page and set $29 and stopped out today. Please correct the portfolio page. Thank you.

Dramatic License

11/07/17 ‐ 9:58am ET November 7, 2017 at 9:58am ET

Jim, you mentioned a possible extension in the October overview. Are you thinking a longer term or shorter. I have the 11/17 options, and hope that this bounces back in the next week. If so it could be very good for me, otherwise I’ll definitely take a hit.

Jim Pearce

11/08/17 ‐ 9:16am ET November 8, 2017 at 9:16am ET

I’m thinking of extending it into January to capture this quarter’s results, which should make clear that the company is growing earnings in a sustainable fashion and put to rest concerns about declining incremental revenue that is not accretive to profits.

Dramatic License

11/08/17 ‐ 10:01am ET November 8, 2017 at 10:01am ET

That makes sense. Thanks.

James Fletcher

11/08/17 ‐ 11:03am ET November 8, 2017 at 11:03am ET

Jim,
Following up on DLs option question, I can’t find the date of the next report. Last year it was Jan 31. If that is the case then we would need the Feb options in order to include the earnings result.

Jim Pearce

11/08/17 ‐ 11:13am ET November 8, 2017 at 11:13am ET

You are correct, but keep in mind this is not an options trading service so you should adjust based on however you choose to implement our advice. That said, any call options expiring after January should benefit from a solid fourth quarter result so I will extend it to a date that should capture that event.

Jim Pearce

11/09/17 ‐ 11:26am ET November 9, 2017 at 11:26am ET

https://www.investingdaily.com/systematic-wealth/alerts/40141/extend-alert-xerox-xrx

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