Over the past four earnings events, Keurig Green Mountain (GMCR) has seen strong moves higher in response to improving company fundamentals.
And because of the continued aggression by buyers, the stock often fails to fill or break below that earnings gap.
I’m expecting a similar pattern to develop this quarter. As GMCR fades its earnings move, it will come into levels in which buyers aggressively come in and defend the stock from coming lower.
Options Play
A straight stock position is not the best way to trade this. Instead, an Oct 120/115 put credit spread is a bullish play that takes the bet that GMCR will be above 120 by October options expiration, which is good odds and good risk/reward.
