Coca-Cola (KO) - Get Report reported earnings on July 27 before the open. It was a mixed report. Earnings were $0.60 per share, versus expectations of $0.58. Revenues missed expected levels of $11.64 billion, reporting $11.54 billion.

Even with the mixed report translating to higher EPS on lower revenues, Coca-Cola dropped on July 27 to $43.40. However, the chart contains several bullish signals.

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Support was set in April slightly above $43.50, and that price has held until earnings day when the price fell below on a large gap. At the same time, resistance has been rising from $45.50 in early May to $46 by mid-July. This pattern -- level support and rising resistance - -formed an ascending triangle, a bullish continuation signal.

Confirming this bullish signal were two non-price indicators. These were the volume spike and momentum moving into oversold range on Relative Strength Index (RSI).

These strong signals forecast a likely recovery in price in the short term. With this in mind, a strategy worth considering is the synthetic long stock. This is opening of a long call and short put with the same strike and expiration. Together, these options mirror the underlying price movement and will gain one point for each point of growth in the stock price.

If the stock price declines, the short put can be closed or rolled forward. As the stock price rises, the short put loses value and the long call gains, tracking the underlying. Since the short put has the same market risk as a covered call, it is a manageable position with low risk.

One example is the options expiring on August 19, in 22 days. A synthetic long stock position can be created with an August 43.50 long call, closing with an ask of 0.49; and an August 43.50 short put, closing with a bid of 0.56. This sets up a small net credit of 0.07. Adjusted for transaction costs of $9 per option, the net debit is only $11. So the breakeven on this is $43.61 per share (strike plus net debit). Any price move in the underlying above $43.61 per share sets up a net profit.

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

Besides blogging,Michael Thomsett alsoblogs at theSeeking Alphaand several other sites.He has been trading options for 35 years. He also teaches on the Candlestick Forum website. To check membership, go to Candlestick Forum membership. His new book can be viewed at