Breakout/Earnings Play

Breakout/Earnings Play - KORS...

Earnings season is coming up but here's a position that can be put on now that I think has a very high upside.

KORS has been absolutely crushed... back in early 2014 is was approaching $100 a share but is now at $43.5. The stock really didn't get hurt during this last round of market volatility which suggests a stable floor. Lastly, from a technical perspective it is nearing the end of a long consolidation pattern and if it breaks out over its 100-day moving average it could get a nice bid.

Here's the chart:

You can see the 50 and 100 day moving averages are closing in on each other... like I said if it breaks out over the 100 it has a ton of room to the upside which is why I would put this trade on now even though it doesn't report earnings until early November.

Here's the trade:

Short 1 November $45 call at $2
Long 6 November $52.5 calls at $0.35

Here's the payout chart:

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