Protective Life Corporation (PL) is the holding company behind Protective Life Insurance as well as other familiar insurance and financial subsidiaries. Today a trader made bullish play on the company betting almost $125,000 in premium that the stock would close above $60 by June expiration. Buying a 1000-lot of these call options represents nearly twelve times usual option volume. The chart confirms a bullish trend as PL is currently trading just above the cloud and the positive trend looks to continue.

The financial services provider jumped more than 10% in Monday’s trading session seeing abnormally high volume. It’s currently trading at $58.52, and hit its 52-week high of $60.38 Monday. The unusual activity in the stock could stem from the fact that analysts haven’t been able to put their finger on a price target for the company, leading to much higher volatility and luring a lot of options traders into playing this stock, with most of the smart ones going long PL.

Apple Inc. (AAPL) Silicon Valley tech giant that creates every “I” related tech product. The popular creator and distributor of computers, tablets, phones, and media has been boring the past two years without a new product launch. The tech company and its CEO Tim Cook, have been criticized for not continuing with the innovation and creativity found in the Steve Jobs era. Over the weekend Apple made the announcement that they had big news to announce Monday at WWDC. The hype and excitement around the potential for a new and innovative product has implied volatility juiced up.

Implied volatility surrounding announcements makes options pop in price value. We see implied volatility get inflated whenever bio tech companies report drug announcements, earnings announcements, and new product announcements. Implied volatility is inflated due to the uncertainty surrounding the news of the announcement. However after the news is announced implied volatility gets crushed as investors have processed the information and how it will affect the company and the stock price.

Awaiting Apple’s announcement, the stock is trading at $633.00 and was up about $1.27 pre-market. Apple has been trading in a fifty two week range between $388.87-644.17. Apple is trading above a very bullish cloud, with a slanted bullish future cloud. I believe Apple’s bullish chart is setting up for a long position. Remember getting in ahead of the announcement will mean that an options buyer will pay more in premium because of the pending announcement. After the announcement implied volatility will get crushed, lowering the value of the option.

Krispy Kreme (KKD) is set to release earnings next Monday, June 2^nd. After falling short of analyst expectation’s for Q4 2014 in March by a penny, the stock sold off about 67 cents. But when the company release fiscal 2015 guidance with high expectations it rallied again. KKD estimated EPS of $0.73-$0.79 on net income of $48 million–. It raised estimates based on its strong growth and ability to cut overhead costs increasing its profit margin.

For Q1 analyst consensus estimates are at $0.23 per share on $126 MM in revenue, expecting an EPS of $0.71 on the year. Krispy Kreme management ratifies its heightened estimates citing the harsh winter as a catalyst behind a weak Q4. The stock’s down almost 3% YTD trading at about the midpoint of its 52-week range of $13.55-$26.63.

Personally, I’m long Krispy Kreme because it’s delicious. But let’s take a look at the historical earnings movements and the trade setup.

Past eight quarters’ earnings reports:

03/13/14   $19.88   $20.11  $+0.23    (1.2%)
12/03/13   $24.55   $19.59  $-4.96     (-20.2%)
08/30/13   $23.23   $19.72  $-3.51     (-15.1%)
05/31/13   $14.26   $17.32  $+3.06    (21.5%)
03/15/13   $14.95   $14.54  $-0.41     (-2.7%)
11/20/12    $7.54    $9.31     $+1.77    (23.5%)
08/23/12    $6.95    $7.31     $+0.36    (5.2%)
05/21/12    $6.01    $6.62     $+0.61    (10.1%)

Historical Earnings Move: Mean 12.4%, Median 12.6%

The Trade: Buying the KKD June 20-21 Call Spread for $0.25 debit

Risk: $25 per 1 lot

Reward: $75 per 1 lot

Breakeven: $20.25

It is a sideways looking chart and looks to be able to move either way.

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