6 Speculative Option Trades on Small Caps Reporting Earnings this Week

Every week I look to the week ahead and screen for small caps that report earnings and then filter them out by looking at fundamentals and the charts using FinViz to find some names that others are likely not watching, but could trade strong post-earnings. Although the options tend to be illiquid, I will provide a few speculative ideas here, although I often just buy the stock in front of earnings.

1) ION Geophysical (IO): Shares of the $2B Seismic Technology Co. with strong ties to Oil & Gas CAPEX, which is strong in FY11, trade 18.3X earnings and 4.4X sales with 30.8% quarterly sales growth. Shares have been consolidating since the last earnings jump and are in a tight triangle, ready to break higher.

Trade: Long the IO May $13 Calls at $0.50 or Better (May 5th Earnings AMC)



2) TTM Tech (TTMI) is a $1.55B maker of printed circuit boards, similar to Jabil (JBL) which posted strong results recently. Shares trade 9.4X forward earnings, PEG of 1, 1.3X sales and 2.1X book with a 7.9% short float. Shares are trading in an ascending triangle with $19.50 the breakout level for a measured move to $23.50.

Trade: Long the TTMI June $20 Calls at $0.90 or Better (May 5th Earnings AMC)



3) CSG Systems (CSGS) is a $734.35M provider of customer care and billing solutions for the cable industry, which has seen strong results. Shares of the software Co. trade 8.5X forward earnings, 1.34X sales and 7.2X cash flow, a good value. There is also a 5.85% short float, 7 days to cover. Shares are trading in an ascending triangle pattern with $21.30 the breakout level for a measured move to $25.

The Trade: Long CSGS June $22.50 Calls at $0.30 or Better (Earnings May 3rd AMC)



4) Ares Capital (ARCC) is a $3.6B Diversified Investments Co. trading 11X earnings, 0.54 PEG, and 1.2X book value. Shares recently broke out at $17.60 to new highs.

The Trade: Long ARCC June $18 Calls at $0.30 or Better (Earnings May 3rd BMO)



5) Atlas Air (AAWW) is a $1.8B provider of air cargo solutions and trades 10.15X earnings, 1.34X sales and 7.1X cash flow. Shares just broke out of a symmetrical triangle after consolidating from a strong move on last quarter's results.

The Trade: Liquidity is a Problem Here, but Long the AAWW June $70 Calls at $3 or Better (Earnings May 4th BMO)



6) PolyOne (POL) is a $1.37B maker of specialty chemicals that trades 12.8X earnings, 0.8 PEG, 0.5X sales and 13.5X cash flow. Shares are in a $12.50 to $14.80 channel, and a breakout past $15 could target a move towards $17.50.

The Trade: Long POL September $15 Calls at $1.05 or Better (Earnings May 4th BMO)



Bonus: Silicon Graphics (SGI) is a $557M provider of high performance computing and storage with high growth rates, 88.6% sales growth Q/Q and coming off a big move on earnings. Shares have consolidated tightly and look ready for another surge.

The Trade: Long SGI June $20 Calls at $0.95 or Better (Earnings May 3rd AMC)



Disclosure: No Position in Above Mentioned as I Just Came Up with these Ideas. These are for speculation only, so only trade what you can afford to lose.