Wingin' It

I love chicken wings. I have to side with Herb Greenberg in that I don't get why people are buying chicken wing stocks, or how Buffalo Wild Wings (BWLD) has done so well. I've never really enjoyed my visits to this chain. I don't dislike it, but if I want wings, beer, sports, or all three, BWLD never comes up on my radar. The stock has enjoyed an incredible run, and while the 18.5% short interest worries me a bit, I am taking two bearish plays into earnings. The first is a May $95-$85-$80 skip-strike-put butterfly for around $3. The second is long a June $95 put, long a May $90 put and short 2x May $85 puts for around $5.40. My downside targets are $90 and $86, based on the charts.

Buffalo Wild Wings (BWLD) Source: View Chart » View in New Window »

On the flip side, I'll take a long flyer, similar to a lottery ticket, into Riverbed Technology's (RVBD) earnings via a long May $15-$18 call spread and short a May $12 put for around $0.65. One alternative on the put side, would be to use a ratio put spread rather than a naked put. In this case, using a long 1x May $13 put and short 2x May $12 put brings the overall cost of the trade up to $0.83, but provides much more downside protection. There is a nice big gap for RVBD to fill and options are looking for a $2-plus move here, so I like the risk-reward. Under $12, and I see value in RVBD, so I am willing to own below those levels....113 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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