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