Tuning Into Pandora

Bears must be flustered by today's action. This bounce has been nothing short of impressive and it comes with volume as well. Perhaps it won't be as much volume as Wednesday, but still, it is significantly higher than what we have been seeing recently. One potential positive takeaway for bears -- and I realize it the idea of a positive takeaway is ironic -- is the last two days have produced huge ranges in equities and commodities. The wider the ranges from day to day, the lower the confidence for the bulls. Diamonds may be a girl's best friend, but the bears prefer volatility.

There are a few earnings names worth watching after the bell. Most of the focus will be on Salesforce.com (CRM), but I've not had much success trading that one into earnings. You get hit in the head enough doing something and sooner or later you learn to stop doing it. I will take a shot at Pandora (P), however. Options appear to be pricing in a $3.75 move on a $17 stock. That is one big move, although with a 21% short interest, it is possible. I have $14 and $18.5-$19 as my ranges, well below the options pricing, so I am looking to sell premium. One approach would be to sell the June $16 put/$18 call strangle for $2.65. I prefer to buy the June $17 straddle, then sell 2x June $15 put/$20 call strangle against the straddles for around $0.50. This gives me a profit range from $17.50 to $22.50 and $16.50 to $13.50. These are ranges I am comfortable with trading....143 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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