How to Trade Pandora Ahead of Earnings

By Andrew Keene  DEC 04, 2012 2:35 PM

With a strong technical long play at hand and a history of exceeding earnings, Pandora could be primed for a strong up move.

 


MINYANVILLE ORIGINAL Pandora (NYSE:P) reports Q3 earnings today, December 4, after the close.  The Internet radio provider has traded lower since reporting breakeven Q2 earnings of ($0.00) on August 29, 2012.
 
Priced at $11.72 after reporting Q2 earnings, the stock tumbled through mid-November, hitting lows at $7.20.  November 19 marked the beginning of a strong rally the past two weeks and change, which pushed the price of back up to $9.25.
 
Just passing through the key technical level at $9.13, Pandora’s rally could continue to push forward; it's shown strong support at this level a handful of times in the past fiscal year.
 
Pandora has exceeded earnings expectations in four of the past five quarters.  With a strong technical long play at hand and a history of exceeding earnings, Pandora could be primed for a strong up move.
 



My trade: Buy the Dec 10-11 Call Spread for $0.25
My risk: $0.25
My reward: $0.75
My breakeven: $10.25

No positions in stocks mentioned.