Fourth-quarter earnings were reported at $62.8 million, up from $48 million a year ago, and earnings per share came in at $1.15, exceeding analysts' forecasts by 2 cents a share. Same-store sales rose 10.7% from a year earlier, surpassing expectations of a 6% rise.
In addition, the company increased the amount of its announced stock buyback plan and lifted its dividend 23% to 38 cents a share.
All this good news comes with a warning: Shares might have reacted excessively, moving too high, too fast.
But at such times, a stock price often overreacts, and this is one example.
The chart shows what happened.
The stock was trading in a 10-point consolidation for five months before breaking out above resistance before earnings were announced. This followed a double bottom that led to an initial breakout, a retreat and then another double bottom before a successful upward move starting in mid-February.
Then it hit the pizza pan with several other reversal signals.
After the breakout, a large 10-point price gap ended with a bearish doji star. These bearish price signals were confirmed by two equally strong warning signs: the largest volume spike in the past six months and the first move of momentum above overbought, as measured by the Relative Strength Index.
These signals all point to a price correction in the very near future. With this in mind, take a look at the March 130 put, currently with an ask of 2.25, for total cost after trading fees of about $234.
Given the strength of recent price moves and multiple bearish signals, this is a small risk that could work as a very successful swing trade.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.
Besides blogging atTheStreet.com,Michael Thomsett alsoblogs atSeeking Alphaand several other sites.He is the author of 12 options books including"Making Money with Option Strategies"(Career Press, 2016) and has been trading options for 35 years. Check out his website.