Seagate Technology PLC (STX) is the provider of electronic data storage products including hard disk dries, commonly referred to as disk drives, hard drives, or HDDs. The stock is currently trading around $50.72 at the lower end of its 52 week range of $44.46-$69.40. The stock has been under performing the market this year falling 23.74% year to date. STX is scheduled to report earnings before the opening bell tomorrow, and the stock is up $1.30 or 2.63% on the session ahead of the close.
Over the past 12 quarters STX has rallied on earnings day 5 times with an average move of 5.23%. The stock appears to be reversing and starting a bullish trend on a chart going into the release having ripped to the bottom of the Ichimoku Cloud in late July on the daily bars. Over the past 12 quarters STX has rallied on earnings day to expiration 5 times with an average move of 6.38%. Investors are hoping to see continued sales growth. With the stock trading in a bullish trend towards the bottom of the cloud, good earnings history and strong support from the 52 week low it is hard to justify anything but a long position in STX.
The options market is currently implying a move of around $2.59 or 5.1% in STX by this Friday’s close giving us targets of $48.13 and $53.31.
Trade: Buy this week’s 52-53 Vertical call spread for $0.29
Risk: $29 per lot
Reward: $71 per lot
Break Even: $52.29