Tyson Foods  (TSN - Get Report)  stock is likely to move higher again after it slumped Monday on earnings news. Smart traders can use stock options to profit from the rebound.

The earnings report was very negative. The company said adjusted earnings per share were 96 cents, vs. analysts' expectations for $1.17. Revenue was $9.16 billion, vs. expectations for $9.38 billion.

Even with these disappointing results, the price action was exaggerated, as shown on the chart.

Several signals coincided on earnings day. The bullish piercing lines is a bullish signal, but price was driven down 9.76 points after the earnings announcement. This large price gap would normally lead to a reversal of at least a portion of the drop, as negative earnings reaction is invariably exaggerated. This was confirmed by the exceptionally large volume spike and by momentum moving more than 5 points into oversold territory (as measured by the relative strength index).

This combination of price, volume and momentum signals a likely short-term bullish reversal. A short-term bullish trade using stock options makes sense, given the extreme price decline of Monday. As of the close on that day, the Dec. 2 options (expiring in 10 days) showed the 60 call at an ask price of 0.55. Adding trading fees, this option can be bought for $64. The break-even level for the stock on this trade is $60.64. With a closing price of $57.60, this requires a 3-point move over the next 10 days. This does not appear unlikely given the 9.76-point drop on earnings day.

Based on how the price changes by the time a trade is entered, the strike may be adjusted to more closely match current conditions.

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 TheStreet.com, Michael Thomsett also blogs at Options Money Maker, the Top Advisor's Corner at Stockcharts.com, and Seeking Alpha. He has been trading options for 35 years and has published books with Palgrave Macmillan, Wiley, FT Press and Amacom, among other publishers. He is working on a new book on options math, to be published by Palgrave Macmillan in 2017.