Going Apple Pinning
Although I like Jabil Circuit (JBL) as a tech buy-write name, I find it hard to get behind this one into earnings based on the current chart setup as well as the pattern we've seen in earnings the last few months. It is hard to anticipate any more than an inline report overall, but revenues would be my main concern. The one plus for JBL bulls is revenue shortfalls haven't always resulted in a downfall, so as long as the company delivers on the earnings-per-share (EPS) front and can avoid a big guide down, then an earnings miss will not necessarily denote a big move lower. Still, I believe the upside will be limited.Jabil Circuit (JBL) –- Daily Source: StockCharts.com View Chart » View in New Window »
Options are pricing in about a 10% move, maybe slightly less, but I feel that one may actually be a stretch here. I would be much more comfortable buying this stock around $20 on its longer-term support line. If I were going to play this one and have the intent to buy around $20, then my approach would be to buy 1 October $22 puts and sell 2x October $20 puts for $0.40 or less. I believe the upside potential is to $22.50 with a possible push to $23.50. The downside target is $20 here although I see a bounce to $20.50 immediately off of $20 unless JBL gaps below $20. Under $20 makes $18 possible, but I don't foresee that as likely here. I am not doing a trade on this one; however, as I will be writing in the Real Money Pro Daily Diary tomorrow, I want to keep the potential for early morning reactions to a dull roar....195 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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