Playing Two Themes Into Earnings

Energy has been hot and Apple (AAPL) has not, but I am taking those two themes into tonight's earnings. Skyworks Solutions (SWKS) has struggled along with AAPL, but I am willing to play it the other way into earnings here. Cirrus Logic (CRUS) put up solid numbers and pessimism is still high on the sector, which makes it ripe for a quick snapback. The short interest is only around 4%, which is lower than what I'd normally like to see, but this also tells me not as many investors believe SWKS is overvalued fundamentally. It doesn't look it to me. With just a little push, SWKS looks headed to $23.50, and I believe earnings will be that push. The $19.50 area looks like the major support on the downside, but over $24 and this one could run. The risk-reward seems to favor the upside. I am looking at the February $21-$24 call spread around $1.25 for this name. If it moves, I can always roll the position up and out. Aggressive players may simply look at the February or March $22 calls.

Skyworks Solutions (SWKS) Source: View Chart » View in New Window »

Energy has me thinking. Phillips 66 (PSX) produced a huge beat along with announcing a filing for a master limited partnership. This won't be coming until the second half of the year, so, for now, I am going to take off half my position. I've been in this one since the low $30s, so some profit taking seems sensible. If I had missed this one, then I'd be watching for a pullback to $55....105 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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