Finish Line Soars on Q4 Earnings

Posted Mar 26th 2010 12:50PM by Brent Archer
Filed under: Major Movement, Earnings Reports, Good news, Options, Technical Analysis

Finish Line (FINL - option chain) shares are rising today after the company reported a Q4 profit of $30.5 million, which translates to 55 cents per share. Analysts had been expecting 48 cents EPS. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on FINL.

FINL opened this morning at $15.55. So far today, the stock has hit a low of $15.35 and a high of $16.63. As of 11:50, FINL is trading at $16.55 up 1.89 (12.9%). The chart for FINL looks bullish.

For a bullish hedged play on this stock, I would consider an August bull-put credit spread below the $12.50 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make an 8.7% return in five months as long as FINL is above $12.50 at August expiration. Finish Line would have to fall by more than 24% before we would start to lose money.

FINL has shown support around $13.60 recently and is expected to report earnings next on 6/24/10.

Brent Archer is an options analyst and writer at Investors Observer. At publication time, Brent neither owns nor controls positions in FINL.

Tags: earnings, Finish Line, FINL, inthenews, options