Premium Earnings 3-15-12 Perfect World, Dole

There is 1 name that reports tonight, Perfect World, $PWRD, that has enough options action to look at a trade for the junkies. Slim pickins’.

Perfect World, $PWRD

Perfect World, $PWRD, has been building an ascending triangle with resistance at 13.05. Above that there is further resistance at 14.82 and 16.10 followed by 17.22 and a Measured Move from the pattern at 17.30 just above. The Relative Strength Index (RSI) is bullish and has been trending higher but not strongly. The Moving Average Convergence Divergence (MACD) indicator seems content to stay very close to the zero line. This chart has a slight upward bias. The reaction to the last 6 earnings reports has been a move of about 10.7% on average or $1.35 making for an expected range of 11.20 to 13.90. The at-the money March Straddles imply a smaller move of $1.20 by Friday. Implied volatility at 200% is high compared to the historical at 44%, and the April options at 73%.

Trade Idea 1: Buy the March 13 Calls for 45 cents.
Playing the chart higher

Trade Idea 2: Buy the March 13/14 Call Spread for 35 cents.

Trade Idea 3: Buy Write the stock on the 13 Call for 12.21.
6.4% return if rises and called away

Trade Idea 4: Buy Write the stock on the 12 Call for 11.73.
2.3% return if stays above 12.

Dole Food, $DOLE

Another name with a catalyst but no options action is Dole Food, $DOLE. The chart, especially on a weekly basis is biased higher in a bull flag. It moves about 4.3% for earnings, or 43 cents at the current levels and has 8.3% short interest. For a small quantified bet the March 10 Calls are offered at 15 cents. The Measured Move higher out of the flag would take it to 11.50.

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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.

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