Tyson Foods, Inc (TSN) is a food production company that distributes chicken, beef, and pork products along with other prepared foods and related products. The company’s stock is currently trading around $28.85 in a 52 week range of $16.55-$32.40. The stock has massively outperformed the market this year adding over 48% to share prices year to date. TSN is set to report their most recent quarterly earnings results on Monday morning before the market open. Historically, the stock is relatively strong on earnings day. The stock has rallied 6 of the past 8 quarters on earnings day with an average move of 4.6%. On a chart the stock is relatively weak with shares trading below the Ichimoku Cloud and the future cloud sloping downward. Despite the weakness in the chart we believe that the historical movement in TSN is strong enough to justify a long ahead of earnings. When trading earnings it is important to understand that catalyst movement can be completely different from the overall trend. With the options market currently implying a move of around $1.90 by December expiration we can look to set up a trade with a target around $30.75.
Trade: Buying the TSN Dec 30-31 Call Spread for $0.25
Risk: $25 per 1 lot
Reward: $75 per 1 lot
Breakeven: $30.25
