1. Setup Recap
Original call (for Wednesday, Dec. 10 after the close): down gap, base case around -4.5%, 63% direction confidence, with guidance expected to come in weak. The pre-earnings framework published explicit weights, led by fundamentals and options.
2. What Actually Happened
Synopsys delivered what reads like a “quality beat”:
- Adjusted EPS: $2.90 vs $2.78 expected.
- Revenue: about $2.26B (company reported $2.255B) vs ~$2.25B expected.
- Forward view: Q1 revenue guidance of $2.36B–$2.42B, roughly centered around the ~$2.38B consensus.
So the feared “weak guide” didn’t show up; the outlook was broadly around expectations.
3. Price Action & Scoreboard
Prior close (Wed, Dec. 10): $475.83 Open (Thu, Dec. 11): $476.61 Close (Thu, Dec. 11): $477.26
- Gap return: +0.16% (flat)
- Session return (close-to-close): +0.30% (flat)
Scorecard vs prediction
- Gap direction: Incorrect (called down; realized flat)
- Full-session direction: Incorrect (called down; realized flat)
- Reversal: No (flat/flat)
One important nuance from the tape: the reaction day traded through a much lower intraday low before recovering, even though it finished close-to-flat.
4. Options, Flows & Example Structures
This is the nightmare for “paying up for motion.” When the stock finishes essentially unchanged on the reaction close:
- Long premium (straddles/strangles) generally needs a big realized move to win; this close-to-close finish would have pressured those.
- Short premium structures (iron condors, short strangles with defined risk) tend to benefit if the close lands near the center.
Path mattered: the intraday drawdown could have stress-tested short premium before the recovery.
5. Hindsight on Reasoning & Weights
Published pre-earnings weights: fundamentals (35), options (25), positioning (20), sentiment (10), valuation (10). In hindsight:
- Fundamentals were fine (beat), so a heavy fundamentals weight didn’t justify a bearish direction call.
- The miss was likely in how positioning and “sell-the-news” risk was interpreted versus the actual guide (which came in roughly okay).
- The best explanation for the flat close is that the market had already priced in a lot of good news or traders needed something more incremental than “slight beat + inline-ish guide” to re-rate the stock.
6. Lessons & Playbook Updates
- Ticker-specific: SNPS can require either a bigger surprise or a clearly upward guide revision to trend meaningfully post-print; otherwise you can get “headline pop + digestion.”
- Process tweak: when you’re leaning bearish mainly on “expectations are high,” demand a second confirming signal (e.g., guide risk, margin risk, or a clear positioning squeeze setup). If not, reduce conviction or move to a “flat/hedged” stance.
- Trade design: if your thesis is “down but not a crash,” consider put spreads (defined risk) rather than outright puts, because a flat close is a real possibility even with intraday volatility.