CSX Beats Earnings

Railroad operator CSX Corp. (CSX 28.39) beat first quarter earnings expectations but saw revenues drop due to the economic downturn. For the first quarter, CSX reported earnings of $0.62 per share, $0.11 better than the First Call consensus of $0.51.

Revenues fell 17.0% year-over-year to $2.2 billion; the consensus expected $2.26 billion. CSX said the revenue drop off was due to a decline in volumes, driven by significant weakness in industrial production, housing starts, and consumer spending, as well as in the agriculture and energy sectors.

Shares of CSX are up 6.5% in the pre-market trading. Essentially, with this positive news my bearish put spread will lose all its value. Congrats to those who played conservative and booked profits when it was +20%.

This is why money management is so important when playing earnings movement related trades. Assuming that all the money is lost, that’s hardly 0.5% to 1% and doesn’t dampen portfolio so much. The idea now is to salvage the trade to recoup whatever maximum possible or convert this into a bullish trade, but I don’t know when it might reverse. The 29 Puts may still have some value.

Net, booking the loss and moving on.

Profitable Trading, OP







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