Another earnings short-squeeze play is biotechnology and drugs player Ligand Pharmaceuticals(LGND), which is set to release numbers on Wednesday after the market close. Wall Street analysts, on average, expect Ligand Pharmaceuticals to report revenue of $13.27 million on earnings of 21 cents per share.
If you're looking for a stock with a decent short interest that's trending strong heading into its earnings report, then make sure to take a hard look at shares of Ligand Pharmaceuticals. This stock has traded up 25% during the last three months, and it's currently trading just 2 points off its 52-week high of $21.75 a share.
The current short interest as a percentage of the float for Ligand Pharmaceuticals is notable at 7.4%. That means that out of the 12.49 million shares in the tradable float, 1.46 million shares are sold short by the bears. Any bullish earnings news could easily spark short-squeeze for shares of LGND post-earnings.
From a technical perspective, LGND is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been trending sideways for the last month and change, with shares moving between $18.42 on the downside and 21.75 on the upside. A high-volume move above the upper-end of its recent range will triggering a breakout trade for shares of LGND post-earnings.
If you're bullish on LGND, then I would wait until after its report and look for long-biased trades if this stock manages to break out above some near-term overhead resistance levels at $20.98 to $20.99 a share and then once it clears more resistance at $21.75 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 150,774 shares. If that breakout triggers, then LGND will set up to enter new 52-week high territory above $21.75 a share, which is bullish technical price action. Some possible upside targets off that breakout are $25 to $28 a share.
I would avoid LGND or look for short-biased trades if after earnings it fails to trigger that breakout, and then drops back below its 50-day moving average of $20.08 a share with high volume. If we get that move, then LGND will set up to re-test or possibly take out its next major support levels at $19.35 to $19.03 a share. Any high-volume move below those levels will then put $18.42 to $17.69 into range for shares of LGND.
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and
strategies to help you become a well-seasoned trader.
100+ monthly options trading ideas
Actionable options commentary & news
Real-time trading community
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.