Monsanto Company (NYSE: MON, $112.96) is scheduled to report earnings before the opening bell of Wednesday’s session. The company is expected to report negative growth, with analysts projecting EPS of $2.93 on $5.58 billion in revenue. For the same quarter one year ago, Monsanto reported EPS of $3.07 on $5.83 billion in revenue.
MON shares haven’t made investors jolly in 2015 – the stock is down nearly 5.5% on the year. The stock has traded in 52-week range $105.76-$128.79, having clocked it’s high on June 25 of last year and it’s low on October 13.
Historically MON stock has been very stable on earnings. The stock has rallied on earnings announcements 4 of the past 4 quarters and 6 of the past 8, but moves only 1.7% on average.
MON offers weekly options, and this Friday’s Apr Weekly MON 113 Straddle is implying a move of about $3.50 or 3.1%, above the average.
My Trade
- Sell the 114-115 Bear Call Spread for $0.35
- Risk: $65 per 1 Lot
- Reward: $35 per 1 Lot
- Break-even stock price (at expiration): $114.35
I like this trade because MON volatility is more expensive than the historical average, and this offers a means to capitalize on that outlook but with limited risk.
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