Increased Concerns

I'm not feeling overly bullish into earnings today. I have concerns about F5 Networks (FFIV), Jarden (JAH) and even Citrix Systems (CTXS). I can't get a great feel for the CTXS chart, so I'll be a watcher there. I will warn you that it's a tough name around earnings, as reactions after hours often diverge from the next day's action. FFIV can be similar in that the move the next day is often outsized compared to the after-hours reaction. Unless there is a very quick reversal, it doesn't seem like one will play out late in the day. Instead, FFIV becomes a continuation play.

F5 Networks (FFIV) Source: StockCharts.com View Chart » View in New Window »

FFIV's chart looks like $85 or $105 to me, with a move continuing through November. I am going to play this one a bit differently just in case it stalls after earnings, which is possible given the big fight around $95 per share. I am a buyer of the November $90-$85 put spread around $2.75. As a small hedge in case shares stall out, I'm also adding a 2x3x1 October 26 $92.5-$90-$85 put combination around $0.80. This part of the trade would be worthless under $85 or over $92.5. I am not concerned with the under $85, since I would likely see an outsized gain in the November put spread. If I wanted to go lotto here, I would probably use the October $105-$110 call spread around $0.55 or October $85-$80 put spreads, but I don't love either of these. I am going to pass on them today....183 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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