Quicksilver (ZQK) surf and beach wear appeal maker and distributor, is setting up for a short on earnings for next week. (ZQK) is currently trading at $6.04 and has been trading in a fifty two week range between $4.81-9.29. The stock has underperformed the broad market plunging -31.24% year to date, down about -$2.74. Quicksilver’s historical earnings performance has been mixed with the stock rallying 4 times on earnings and selling off 4 times on earnings over the last 8 quarters. Quicksilver’s average move on earnings has been 11.7%, although we have seen moves as large as 31.7%. Technically the stock is trading very bearishly below a downward sloping bearish cloud. The stock is currently sitting in a stagnant range that matches where it was at 9, 26, and 52 weeks ago. Currently the June options market is implying the stock could move .88 cents. Unfortunately there aren’t any weekly ZQK options that could provide a cheaper way to play ZQK. I believe the cloud is showing a very bearish pattern that is setting up for a short into earnings.

With the implied move a trader can calculate his measure move targets:
Upside Target: 6.83
Downside: 5.17

Trade: June 6 Puts for .35
Risk: $35 per one lot
Max Reward: $5.65

PBF Energy Inc (PBF) is a petroleum product supply and refining company headquartered in New Jersey. PBF just closed at $32.01 and has traded in a 52-week range of  $20.17-$32.41. Today, a trader bought 10,000 PBF Jan 2015 35-40 Bull Call Spreads for $1.80 debit. This is extremely bullish activity for the stock. Of the ten analysts covering PBF five have issued a “Hold” rating and four issued a “Buy” rating making the company a consensus “Hold”. PBF Energy beat earnings last quarter and is looking to improve for the rest of the year. Furthermore, it issued its quarterly dividend today, giving shareholders 30 cents per share.

My Trade: I bought the PBF Jan 2015 35 Calls for $2.00 debit

Risk: $200 per 1 lot

Targets: $2.20, $2.40, $2.60, $2.80, and $3.00

Greeks of this Trade:

Delta: Long

Gamma: Long

Theta: Short

Vega: Long

The Pantry Inc. (PTRY) a convenience store operator, is up on news of an upgrade today. The stock was previously rated neutral by analyst. The Pantry Inc. (PTRY) is up about 3.5% on news of an upgrade to “outperform” today. The Pantry Inc. is currently trading at $16.70, and has been trading in a range between $10.99-17.62. Year to date Pantry Inc. has underperformed the market as shares have fallen 1.01% year to date. Options traders seem to have a bullish perspective on The Pantry Inc, today as we saw a trader buy 1147 December 20 Calls for .95 cents. Traders are continuing to jump on board with this trade as volume has continued to increase throughout the day. The original order showed volume of 1,501 and volume has increased to 2,815. Looking at The Pantry on the Ichimoku cloud, it is currently trading above cloud. With the bullish order flow and the stock trading above the cloud, I believe The Pantry is setting up for long.

Trade: Buying the December 2014 20 Calls for .95
Risk: $95 for one lot
Reward: Unlimited

RadioShack (RSH) surged Thursday after an options trader bet big on the distressed consumer electronics retailer, buying around 20,000 Oct 14 calls at a strike of 1.5. The stock reached a high, up more than 30% on the day, of $1.75 before leveling off to $1.52 as of this writing. RSH has traded in a 52-week range of $1.12-$4.36.

RadioShack has recently fallen on hard times down almost 42 percent on the year and the word bankruptcy isn’t far from mind. Perhaps this is making it more difficult for the retail chain to turn things around; its creditors vetoed a cost cutting plan that would have closed as many as 1,100 store locations, possibly bracing for default.

However, depending on your risk profile, this sets up nicely for a short-term long position in the company as CEO Joe Magnacca fights to bring it back. While the downside of this trade setup is very real, the reward is potentially very handsome and can be bought at a discount.

The Trade: Buy the RSH Jan 2015 1.5 Calls for $.42

Risk: $42 per 1 lot

Targets: $.50, $.60, $.75 and $.90

Greeks of this Trade:

Delta: Long

Gamma: Long

Theta: Short

Vega: Long

This article was written by Kyle Sheahan, an Associate at Keeneonthemarket.com.

e: Kyle@Keeneonthemarket.com

Boardwalk Pipeline Partners, LP (BWP) is a Texas-based natural gas processing, storage and transportation company that owns approximately 14000 miles of natural gas pipeline throughout the United States. The firm has been trading in a 52-week range of $11.99-$33.00. After a major dividend cut in the first quarter, leading to a massive selloff, BWP is down 31.34% YTD.

The company looks to be troubled, however, this can be seen as a good buying opportunity. BWP has been trending higher after the February selloff and with the growth in domestic natural gas production becoming more prevalent, BWP may find itself in a position to capitalize on its infrastructure, which extends into the gulf to potentially useful export sites as well as the northeast where the shale rock that the natural gas is being harvested from is located.

Last Thursday, an options trader made a huge long play on the BWP September calls, selling off the September 15 calls for 3.30 and buying into the September 17.5 calls at 1.80. Today BWP opened at $17.42.

This article was written by Kyle Sheahan, an associate at KeeneOnTheMarket.com.

e: Kyle@keeneonthemarket.com

The Euro is expected to weaken against the Japanese Yen in the near future. This is due to a lack of positive global economic outlook, which is generally when this pair strengthens. The Russia-Ukraine situation has proven tumultuous and, along with Europe’s stagnant economy due to near-zero inflation rates, has caused the Euro to soften against its more conservative, low-yielding Asian counter-currency.

The outlook for EUR/JPY is bearish and we’ll have to wait until ECB’s actions to spur growth, which ECB President Mario Draghi implied would likely come in June, for any potential rebound.

The Trade: Short EUR/JPY @ 139.00

Stop-loss at 139.80

Target 1: 138.80

Target 2: 138.60

Once Target 2 gets filled, move stop-loss to breakeven, 139.00.

Target 3: 138.40

Target 4: 138.20

This article was written by Kyle Sheahan, an associate at KeeneOnTheMarket.com.

e: Kyle@keeneonthemarket.com

Guess Inc. (GES) apparel designer and distributor is currently trading at $27. Guess Inc. is trading in a fifty two week range between $26.14-34.94. The stock has underperformed the broad market this year; as GES is down 13.16% year to date. Guess Inc. will report earnings on May 29 after market close. Guess has rallied only 3 of the last 8 times on earnings. The past two quarters Guess sold off on earnings announcements. The average move on earnings for Guess is about 4.7% percent. This quarter market makers are implying that the stock could move 10.8%. An Options trader seem to think that the stock will rally on earnings or is hedging before an earnings move. Today we saw a trader come in and buy 1000 GES July $29 calls for .49 cents. The stock is trading very bearishly below the Ichimoku cloud. I believe with a terrible chart, mixed historical earnings performance, GES is setting up for a short on earnings.

Trade: 26-24 Bear Put Spread
Risk: 30 per one lot
Max Profit: 170 per one lot

Hillshire Brands (HSH), owner of popular meat brands such as Jimmy Dean and Ball Park, woke up to an enticing offer Tuesday after revealing plans to purchase Pinnacle Foods, Inc. (PF) just a couple of weeks ago. The proposed deal between the two food giants for $4.2 billion dollars was countered by Pilgrim’s Pride Corporation (PPC), which offered Hillshire Brands $6.4 billion—or $45 per share—in cash for the takeover, contingent on Hillshire abandoning its deal with Pinnacle. This represents a heavy premium from HSH’s previous share price and will cost Pilgrim’s Pride an additional $163 MM break-up fee it will cover for HSH if all goes to plan.

Pilgrim’s Pride, the Colorado-based subsidiary of Brazilian food giant JBS, is comfortable doing so as sentiment from its Chief Executive is extremely optimistic. CEO William Lovette said today that the deal, which he hopes to close as soon as Q3 2014 will create a “fully integrated protein leader” (PPC is the largest chicken producer in the US).

Hillshire Brands closed Friday at $37.02 and enjoyed a nice jump at Tuesdays opening bell to $44.75 after the announcement of the proposed deal. HSH has been trading in a 52-week range of $30.35-$45.52 hitting its yearly high Tuesday morning, and up almost 22% YTD.

The proposed acquisition could spell good things for PPC and HSH as both stocks have benefited from the announcement. Pinnacle is wallowing in potential rejection with shares dipping almost 7% today on the news.

The Week Ahead

After the long weekend, we enter a busy week of economic data releases. Durable goods data was released earlier this morning coming in well above expectations, jumping .8 percent after analysts forecast a decline of .8 percent. Ex-transportation numbers show durable goods orders with a tenth of a percent rise. This is a leading indicator of positive economic growth.

The S&P Case-Shiller House Price Index came out this morning, measuring the value of residential real estate. March numbers came in higher than expected with a .9 percent gain. April is expected to show the same home price appreciation and sales jump as we enter the summer selling season.

Analyst forecast a decline in consumer confidence for May by .2 percent from April. This proved to be accurate after the report was released today.

Dennis Lockhart, President of the Federal Reserve Bank of Atlanta will also be speaking tonight from LSU.

Other notable releases such as GDP, Jobless Claims, Crude and Natural Gas, as well as Personal Income reports are scheduled for Thursday and Friday.

Today the news broke that Pilgrims Pride (PPC) has made a cash offer for Hillshire Brands (HSH). Currently (HSH) is up 22% pre-market! Pinnacle Foods inc (PF), which previously made a bid for Hillshire Brands, is currently down 6% pre-market as it looks the Pinnacle’s deal will fall through. Pilgrims Pride Corporation is up about 3.63% after it announced its plan to buy HSH with a cash offer. Hillshire Brands has been trading in a fifty two week range between $30.35-38.08. Hillshire is trading above a neutral cloud and should continue to move through the fifty two week highs. As news and uncertainty surrounding the potential buyout in Hillshire continues; implied volatility should continue to give the options a boost. It is unclear which company will ultimately buyout Hillshire Brands. Pinnacle could still make a counter offer in attempt to save the Hillshire deal. The bids for Hillshire Brands should continue to lift HSH stock bullishly.