Monster Beverage Corporation (MNST) is engaged in the creation, design, distribution and selling of monster products including energy drinks, sporting events, Monster TV and Monster Music. The stock is currently trading around $147.72 at the upper end of its 52 week range of $64.27-$155.83. The stock has been out performing the market this year rallying 16.3% year to date. MNST is scheduled to report earnings after the closing bell today, and the stock is down huge, $6.28 or 4.08%, on the session ahead of the close.
Over the past 11 quarters MNST has rallied on earnings day 6 times with an average move of 5.67%. The stock appears bullish on a chart going into the release having traded above the Ichimoku Cloud since July, but is dropping huge over the past week on the daily bars. Over the past 11 quarters MNST has rallied on earnings day to the nearest expiration 4 times with an average move of 4.99%. Investors have extremely high expectations that the energy-drink giant will be able to continue the impressive run of fast-paced growth. With the stock trading at a bearish trend, okay earnings history, extremely high expectations and big money getting short according to Alpha Tracker it is hard to justify anything but a short position in MNST.
The options market is currently implying a move of around $12.9 or 8.8% in MNST by the end of this week giving us targets of $134.82 and $160.62.
Trade: Buy this week’s 138-136 Vertical put spread for $0.50
Risk: $50 per lot
Reward: $150 per lot
Break Even: $137.50
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