Play ABX and CECO Earnings
Getting Positioned for Next Week
PLAY: Buy the CECO March 22 Calls (O:CECO 10C22.00) and the CECO March 20 Puts (O:CECO 10O20.00) at market, good for the day. The total cost should be just under $2.00. Do not place a protective stop limit at this time.
PLAY: Buy the ABX March 36 Calls (O:ABX 10C36.00) and the ABX March 35 Puts (O:ABX 10O35.00) at market, good for the day. The total cost should be just under $3.70. Do not place a protective stop limit at this time.
Dear Bottarelli Research Member,
First and foremost, congratulations on your Agrium (AGU – NYSE) play. Thus far today, we’ve pegged the exact high, which means we’ve maximized our profit potential. Like I mentioned before, AGU typically moves $8.00 to $10.00 in reaction to positive earnings, so the upside move might not be done. If it makes sense to re-buy AGU calls on this dip, we’ll certainly do so. I’m also following Mosaic (MOS – NYSE) for a similar upside move. After all, if AGU just popped above the 50-day moving average, I’d think that MOS will soon follow this lead. Therefore, we have two potentially lucrative setups to follow here. More to come.
In the meantime, we’re currently set up for earnings on February 16th. As you know, teen retailer Abercrombie & Fitch (ANF – NYSE) is expected to report earnings of $0.87 before the market opens, and it’s always a coin flip which direction the stock will move. That’s why we entered the ANF March 33 Calls (O:ANF 10C33.00) and ANF March 32 Puts (O:ANF 10O32.00) for a total price of $3.20. Currently trading for a total of $3.30, we’re all set for a strong earnings reaction. Hold.
At the same time, we’re also positioned for February 16th earnings from ridiculously overpriced organic grocer Whole Foods Market (WFMI – NASDAQ).Now I admit, I love going into Whole Foods. But after I throw ten items into the basket, it seems like I’m already over $100. Take the family there, and you’ll find yourself running to the ATM to check the balance on your checking account. But I digress. WFMI is expected to report earnings of $0.26 per share, and the reaction is typically a big move. As a result, we entered the WFMI March 29 Calls (O:WFMI 10C29.00) and WFMI March 27 Puts (O:WFMI 10O27.00) for a total of $2.85. Currently trading for $2.80, we’re set for a strong earnings reaction here as well. Hold.
Moving onto earnings scheduled for February 17th, we have for-profit education firm Career Education (CECO – NASDAQ) expected to report $0.33 after the market close. As we’ve seen before, the for-profit education sector is extremely volatile, so we have another nice opportunity for an earnings winner. Looking specifically at the CECO March 22 Calls (O:CECO 10C22.00) and CECO March 20 Puts (O:CECO 10O20.00), we can own both contracts for less than $2.00 (the calls currently trade for $0.90 and the puts currently trade for $1.00). Based on these low prices, and the potential for a strong earnings move, the risk-versus-reward scenario is in our favor. Therefore, let’s get positioned now!
PLAY: Buy the CECO March 22 Calls (O:CECO 10C22.00) and the CECO March 20 Puts (O:CECO 10O20.00) at market, good for the day. The total cost should be just under $2.00. Do not place a protective stop limit at this time.
Looking at February 18th, we also have an interesting situation in Barrick Gold (ABX – NYSE), scheduled to report earning of $0.59 before the open. As you know, gold prices have gotten pounded lately, which has pushed ABX aggressively lower. Going into earnings, this could ignite a big push in either direction. Since the prices are right, let’s get positioned to ride this one as well.
PLAY: Buy the ABX March 36 Calls (O:ABX 10C36.00) and the ABX March 35 Puts (O:ABX 10O35.00) at market, good for the day. The total cost should be just under $3.70. Do not place a protective stop limit at this time.
SPECULATORS: Also reporting after the close on February 17th is the most volatile gold stock I follow, Agnico-Eagle Mines Limited (AEM – NYSE). If you recall, AEM fell over $7.00 the last time they reported earnings, and their upcoming announcement might offer the same type of move.
Since AEM trades in $5.00 strike price increments, the parameters for an earning strangle are not ideal. But, what we could do is speculate on a downside move by playing cheap puts (such as the AEM March 50s for $1.85). I’m not sure whether or not I want to officially recommend this position, so let’s sit tight. I just wanted to bring it to your attention as something I’m mulling over. Until then…
Lock and load!
Sincerely,
© 2012 CSR Group, LLC. All rights reserved. Published in USA.
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