Taking Tangoe for a Spin

Monster Beverage (MNST) may not be among the largest companies, but it has indeed been a monster for bears to deal with. The stock has doubled over the last year -– it's up 50%, year-to-date. All eyes are watching to see if this will be the next high flyer to fall. However, the short interest is very low, which I feel favors the bears. Yet buyout rumors are also constantly swirling around the name. My gut tells me the air is about to come out of its sails, but there has been strength in Pepsico (PEP), Coca-Cola (KO) and Dr. Pepper Snapple Group (DPS), which is hard to overlook.

Monster Beverage (MNST) Source: StockCharts.com View Chart » View in New Window »

Options have this one pricing in a 12.5% move, which is around $8.50, but I am seeing more of a $10 move possible to the downside and $7-$9 on the upside. The implied volatility is pushing skyward today causing me to lean toward spreads or combination trades. For instance, if I wanted a bearish stance, then August $65-$57.50 put spreads around $2.00 would be attractive. On the flip side, August $70-$77.50 call spreads also around $2.00 would be appealing if I were bullish. Unfortunately, I am fighting my gut along with valuation vs. a sector that has stayed steady. I am going to have to sit out the pre-earnings play and wait until tomorrow to see if the chart plays outs. ...236 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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