Will The Kroger Company (KR) See a Move Higher on Earnings?

The Kroger Company (KR) is a well known US based retailer and the country’s largest supermarket chain by total revenue. In addition to its grocery/supermarket stores, the Kroger Company also operates a variety of mixed marketplace, convenience, and jewelry stores across 31 states. At the time of this post (11:15AM CST) KR is currently trading at 58.80, down 1.16% on the day. The stock’s 52 week range is fairly wide, trading from 35.13-60.38. The year’s highs were printed just days ago on November 28th, as the stock maintained a very strong uptrend throughout the year after printing lows in early February. KR is set to report earnings tomorrow, 12/4/2014 before the market open.

The recent historical trend for KR following its earnings reports has been predominantly bullish, trading higher on five out of the last eight subsequent sessions, and posting an average move of 3.3% during this time. The options market is currently pricing in an implied move of 6.89% by this month’s December 20th expiration, reflecting what would be a $4.05 move in the underlying equity in the next 17 days. KR has been immensely bullish over the course of the year, up over 41% from this time in 2013. The near term trend appears very bullish and intact as well, as the stock has pulled back slightly off of the highs, but remains well over the upward sloping Ichimoku Clouds and the relevant moving averages on the daily chart. Considering this continued bullish sentiment in KR, I will be looking to position myself long going into the earnings report tomorrow morning.

Potential Trade: Buying the KR Dec 60-62.5 Call spreads for $0.50
Risk: $50 per 1 lot
Reward: $200 per 1 lot
Breakeven: $60.50