Traders Analysis

Third-quarter earnings season officially kicks on Tuesday with Alcoa's (AA).

I am now looking at Genentech (DNA) which will announce their Q3 2006 earnings on
October 10, 2006 after market close.

Genentech has met expectations twice and beat expectations twice over the past four quarters. The current consensus estimate for third-quarter earnings of 46 cents is unchanged from 30 days ago, but one thing that caught my eye was the most recent consensus. The most recent consensus, which reflects the average of recently issued revisions, is 43 cents - three cents below the overall consensus estimate.

So with this I will probably go for an intermediate out of the money (OTM) call option where the strike price is above the actual stock price tommorrow. If the earnings fail to impress , then stock will likely to get slump and gap down , I will then convert the trade into a bear call spread immediately .