Premium Earnings 4-3-12

• Posted by Greg Harmon
• on April 3rd, 2012

Two names that report tonight and tomorrow make up today’s choices: Mitcham Industries, $MIND, and Monsanto, $MON.

Mitcham Industries, $MIND

Mitcham Industries, $MIND, is a thin stock with a great chart. it is breaking higher after crossing the 50 day Simple Moving Average (SMA) with expanding Bollinger bands. The Relative Strength Index (RSI) is bullish and rising with the Moving Average Convergence Divergence (MACD) indicator is positive and increasing. Both of these support a move higher. Resistance higher is found at 24.90 and 26.22 before it has free air higher. It also has over 7% short interest. Support lower is found at 23.76 and 22.23 followed by21.66 and 20.66 and then 19.86 and 18.79. The reaction to the last 6 earnings reports has been a move of about 8.7% on average or $2.05 making for an expected range of 22.15 to 26.25. The at-the money Straddles imply a similar move of $2.90 by April Expiry. They report tonight.

Trade Idea 1: Buy the April 25 Calls for $1.10.

Trade Idea 2: Sell the April 22.5 Puts for $0.55.

Trade Idea 3: Buy the April 22.5/25 Risk Reversal for 55 cents.

Trade Idea 4: Buy the May 22.5/25 Risk Reversal for 55 cents.

Trade Idea 5: Buy the April/May 25 Call Calendar for 70 cents.

Trade Idea 6: Buy the April/May 25 Call Calendar and sell the May 20 Put for 35 cents.

Monsanto, $MON

Monsanto, $MON, is breaking above consolidation with resistance higher at 82.25 and 83.75 before it is in the clear. The RSI is bullish and rising while the MACD is positive and increasing. This chart has a solid upward bias. Support below comes at 80.40 and 78.80 followed by 77.50 and 75.80. The reaction to the last 6 earnings reports has been a move of about 4.0% on average or $3.30 making for an expected range of 78.40 to 85.00. The at-the money Straddles imply a larger move of $4.25 by Expiry. They report in the morning.

Trade Idea 1: Buy the April 82.5 Calls for $1.61.

Trade Idea 2: Buy the April 82.5/85 Call Spread for 84 cents.

Trade Idea 3: Buy the April 82.5/85 Call Spread Risk Reversal selling the 77.5 Put for 6 cents.

Trade Idea 4: Buy the May 82.5/85 Call Spread for $1.02.

Trade Idea 5: Buy the May 82.5/85 Call Spread Risk Reversal selling the 75 Put for $0.06.

Trade Idea 6: Buy the May 82.5/87.5 Call Spread Risk Reversal selling the 77.5 Put for $0.17.

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