The Forgotten Earnings Season

As we wind our way through earnings season, it will be one not to forget but one that is forgotten. All the focus on Europe has drawn attention away from the large number of reports over the last few weeks. It should make for some opportunities in the next few weeks to buy strong reports that had little impact on a stock, but for now, taking notes and being patient may be the best course of action.

I am not particularly bullish on Faro Technologies (FARO), Coherent (COHR) and Whole Foods Market (WFM) tonight, but the options are too thin on FARO and COHR to ready establish any positions. For WFM, I am using an unbalanced butterfly, going long 2x November 70 puts, short 3x November 65 puts and long 1x November 60 puts, which is around $3.00. My downside target on WFM is $66.90, so the play here might be to sell the November 70 puts if it falls and establish a November $65-$60 bullish put spread. I'm looking for $44-$45 on COHR, and $38, possibly even $35 on FARO, but the upside to the stocks is similar, so I am not looking to short shares into earnings. If the spreads on the puts tighten before closing, then I may consider November 50 puts on COHR or November 40 puts on FARO.

On the long side, I have a few I find attractive. Polypore International (PPO) has a chart setup similar to when it popped 20% after earnings in May. On its last earnings report, the stock fell, but it has run strong into earnings. The play here is a November 55-60 call spread around $1.30; however, it is aggressive. The stock needs to move, and any flat or negative reaction will crush this setup....175 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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