Two More Earnings Plays
Add WFMI and ANF Baskets
PLAY: Buy the ANF March 30 Calls (O:ANF 10C33.00) and the ANF March 32 Puts (O:ANF 10O32.00) at market, good for the day. The total cost should be around $3.20. Do not place a protective stop limit at this time.
PLAY: Buy the WFMI March 29 Calls (O:WFMI 10C29.00) and the WFMI March 27 Puts (O:WFMI 10O27.00) at market, good for the day. The total cost should be around $2.85. Do not place a protective stop limit at this time.
Dear Bottarelli Research Member,
As I mentioned before, we have some potentially strong earnings plays coming our way next week. With the markets closed for President’s Day next Monday, we must get prepared for next week’s earnings plays sooner rather than later. In fact, getting positioned for Tuesday’s earnings today just might put us in position to lock in a quick 20% to 25% winner before we even get to the weekend. On that note, here’s what I have cooking…
First up is teen retailer Abercrombie & Fitch (ANF – NYSE), who is expected to report earnings of $0.87 per share before the market opens next Tuesday. From a trading perspective, what’s nice about ANF is the fact that teenage clothing styles change so quickly, ANF is often times ahead of the fashion curve (which sparks a strong up-move) or hideously behind the fashion curve (which sparks a strong down-move). Whatever the case, this works into the hands of a strangle position.
For example, if distressed denim jeans with 10 to 15 holes suddenly goes out of style, ANF will be left sitting on a boatload of unsellable inventory. Or, it could be the other way around. Whatever the case, you get the idea. That’s why it looks like ANF has the ability to move up or down $4.00 based on next week’s earnings. Let’s get positioned to ride this momentum by adding a basket of March calls and puts now.
PLAY: Buy the ANF March 30 Calls (O:ANF 10C33.00) and the ANF March 32 Puts (O:ANF 10O32.00) at market, good for the day. The total cost should be around $3.20. Do not place a protective stop limit at this time.
Next up is organic grocer Whole Foods Market (WFMI – NASDAQ), who is expected to report earnings of $0.26 after Tuesday’s close. If you recall, we hit a nice 60% winner playing WFMI earnings last year. Looking at the chart below, it’s clear that WFMI might be once again setting up for another upside move. As you can see, the stock has been in a relative flat-line in 2010, trading between $27.50 and $30.00 all year long. But with the stock now poking above $28.00, it could be setting up for the next upward push. Next week’s earnings could be the catalyst that triggers the momentum that the stock is waiting for. Let’s get positioned to ride this move now!
PLAY: Buy the WFMI March 29 Calls (O:WFMI 10C29.00) and the WFMI March 27 Puts (O:WFMI 10O27.00) at market, good for the day. The total cost should be around $2.85. Do not place a protective stop limit at this time.
At the same time, continue to hold your AGU March 60 Calls (O:AGU 10C60.00), APOL March 60 Puts (O:APOL 10O60.00), and CTRP February 32.50 Calls (O: CTRP 10B32.50).
And as always…
Lock and load!
Sincerely,
© 2012 CSR Group, LLC. All rights reserved. Published in USA.
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