Procter & Gamble Co. (PG) provides consumer packaged goods operating in five segments under GBUs: Beauty, Grooming, Health Care, Fabric Care, Family Care, and Home Care. The stock is currently trading around $80.81 at the lower end of its 52 week range of $77.10-$93.89. The stock has been under performing the market this year falling 11.29% year to date. PG is scheduled to report earnings before the opening bell tomorrow, and the stock is up $0.58 or 0.72% on the session ahead of the close.
Over the past 12 quarters PG has rallied on earnings day 8 times with an average move of 2.64%. The stock appears slightly bullish on a chart going into the release having broken through the upside of the Ichimoku Cloud in July on the daily bars. Over the past 12 quarters PG has rallied on earnings day to expiration 8 times with an average move of 3.47%. Investors are mainly interested to see how the higher prices of products will effect sales and savings on oil-based commodity costs. With a bullish chart, great earnings history and savings with oil based products it is hard to justify anything but a long position in PG.
The options market is currently implying a move of around $1.80 or 2.2% in PG by this Friday’s close giving us targets of $79.01 and $82.61.
Trade: Buy this week’s 81.5-82.5 Vertical call spread for $0.28
Risk: $28 per lot
Reward: $72 per lot
Break Even: $81.78
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