ConAgra Foods (CAG) - Get Report  plans to report quarterly results after the stock market closes on Thursday. Technical analysis shows that the company's shares are poised to jump, and a better-than-expected earnings report could be just the trigger. Traders can use stock options to profit from such a move.

Let's look at the chart.

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The chart reveals two bullish candlesticks, which are highlighted. The first is a bullish harami formation, and the second is a bullish piercing lines formation. The price moved down 2.5 points in early September, below support at $45.50. Now with earnings coming up, the potential is there for a nice upside move.

With this in mind, look at the Oct. 21 options, which expire in 24 days. This is the next options cycle. The stock closed on Sept. 26 at $43.04, and the put option with a 43 strike price closed at a bid of 1.10. Subtracting trading fees, the sale of this put option nets $101.

Although there are no guarantees, a positive report will take the stock price higher, making this short put profitable as early as the end of this week. If the stock price declines, the short put can be closed or rolled to avoid exercise. The short put is not a high-risk trade, as its market risk is identical to the risk of a covered call. As a swing trade, this short put has great potential under the current technical conditions for ConAgra Foods stock.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

Besides blogging at

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Michael Thomsett also

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He has been trading options for 35 years and has published books with Palgrave Macmillan, Wiley, FT Press and Amacom, among other publishers.

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