A Pair of Plays Ahead of Earnings

Decker's Outdoors (DECK) has made a nice pre-earnings run, breaking out of the very large wedge formation covered back on Feb. 3. At this point, the put portion of the February $40 straddles offers nothing. No hedge. No value. No protection on the current position. Although the stock still looks very good, I don't see a huge reason to hold onto the straddle. It was a volatility trade, targeting $34 or $44 on the stock. DECK is now trading above $44, so the trade target has been reached. I continue to hold the shares though and have no intention of selling them right now.

Decker's Outdoors (DECK) –- Daily Source: StockCharts.com View Chart » View in New Window »

Going into earnings, both Deere (DE) and Rackspace (RAX) have me concerned from a technical standpoint. DE has fallen off recent highs consolidating in a little rounding bottom formation, but the loss of momentum and bearish crossover in the TRIX have me looking for a retest of $89-$90 on shares. It is possible we will see a sell-the-news reaction, although I don't expect it to be terrible, so I am taking a very measured bearish position. In fact, if DE falls too far, then I risk a loss beyond the premium paid for the trade....291 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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