Darden Restaurant Earnings Idea
- Posted by Greg Harmon
- on March 21st, 2013
Another stock that reports Friday before the open is Darden Restaurants, $DRI.
Darden, $DRI, has been consolidating between 48.5 and 49.20 since moving higher into that range off of the February low. The chart is showing a bearish Bat Harmonic, with a Potential Reversal Zone (PRZ) at 52.46 and the consolidation is also a bull flag that on a break higher carries a target of 57.90. The Relative Strength Index (RSI) is bullish and rising with a Moving Average Convergence Divergence (MACD) indicator that is leveling in the flag. An upside bias exists. Support lower comes at 48.50 and 47.80 followed by 46 and 44. Resistance higher is found at 49.50 and gap fill to 51.80 before 53.60. The reaction to the last 6 earnings reports has been a move of about 2.63% on average or $1.30 making for an expected range of 47.70 to 50.30. The at-the money April Straddles suggest a larger $2.40 move by Expiry with Implied Volatility low at 19% similar to the May.
Trade Idea 1: Buy the April 50 Call for $0.60.
Trade Idea 2: Sell the April 45 Puts for a $0.20 credit.
Trade Idea 3: Buy the April 45/50 bull Risk Reversal for $0.40.
Trade Idea 4: Buy the May 45/50 bull Risk Reversal for $0.45.
I like the Risk Reversal in May best as it gives an extra month for a mere 5 cents.
Its Time For a Sale!
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Dragonfly Capital Views Performance Through March 2013 Expiry
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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.blog comments powered by Disqus
Gregory W. Harmon CMT, CFA, has traded in the Securities markets since 1986. He has held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
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