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Earnings Edge: One Stock To Watch

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Although earnings season is beginning to wind down, traders have an eye on a company that could surprise the Street, next week!

We’re talking about Applied Materials. Considering the Semiconductors HLDRs ETF is up about 11% for the year and Applied Materials is one of its top components, could this stock surprise to the upside?

According to the website Zaks.com, on average analysts are expecting a loss of 9 cents per share, however “the company has beat expectations during 7 out of the last 8 quarters.”

Traders are clearly keeping a close eye on this name. Dan Nathan, chief options strategist at Phoenix Partners admits that he is.

He explains that all of AMAT's rivals and customers have already reported earnings so investors have a good sense of what the environemnt looks like for AMAT.

Although the company will likely report a loss, Nathan feels it can turn around quickly once orders pick up. As a result he thinks it's worth a look as an early cycle play.

What’s the trade?

If you own the stock, I’d sell the at the money calls, counels Nathan. And if you don't own the stock, sell some at the money straddles.

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