Premium Earnings 4-9-12

One name that reports tomorrow make up today’s earning play: Supervalu, $SVU.

Supervalu, $SVU

Supervalu, $SVU, has been steadily moving lower since it last reported earnings January 11th. Today it is catching a bounce after the full move lower of 40%. The Relative Strength Index (RSI) is bearish but turning higher off of an oversold condition with the Moving Average Convergence Divergence (MACD) indicator negative but starting to improve. Both of these support the potential for a bottoming consolidation or reversal. Resistance higher comes at 6.10 and 6.50 followed by 6.86. Support lower is found at 5.07, today’s low. This stock also has 20% short interest. The reaction to the last 6 earnings reports has been a move of about 11.9% on average or $0.64 making for an expected range of 4.72-6.00. The at-the money Straddles imply a larger move of $0.90 by Expiry. Implied Volatility in the April options is elevated at over 100% compared to the May options at 84% and historical volatility at only 36%.

Trade Idea 1: Buy the April 6 Calls for 20c.
Plain and simple that is it! Risks 20c on a good reaction.

Trade Idea 2: Buy the May 6/7 Call Spreads for 20c.
If you want more time.

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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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