Pandora Media, Inc (P) is streaming internet radio station in the United States with over 125 million registered users. Shares of P are currently trading around $20.05 in a 52 week range of $7.40-$31.94. The stock has had a great year adding over 216% to share prices year to date. P is set to report their most recent quarterly earnings report today after the market close. Historically P has been relatively weak on earnings day. Over the past 8 quarters the stock has sold off 5 times on earnings day and rallied 3 times with an average move of 14.2%. On a chart however, P is trading relatively well. Shares are trading just off their 52 week high and well above the Ichimoku Cloud. The future cloud is also upward sloping indicating there can be more upside in store for P. Options order flow has also been relatively bullish in P. On Tuesday a trader sold of the Nov 22nd 26 puts for $0.65 indicating a strong belief that the stock will close above $26.00 on tomorrow’s expiration. With activity like this and a stong chart we believe P sets up well for a long ahead of earnings. With the options market currently implying a target of $32.15 for tomorrow’s close we will look to set up a trade at that level.
Trade: Buying the P Nov 22nd Weekly 31-32 Call Spread for $0.30
Risk: $30 per 1 lot
Reward: $70 per 1 lot
Breakeven: $31.30
