A strategy idea for options trading investors.

We hope you got in on our KB Home (NYSE: KBH) put trade from earlier this week. The stock was hammered to a 10-month low after reporting a wider than expected loss on Wednesday. The plunge rewarded our recommended put to the tune of a 250% profit. Not bad for a trade open for just one day.

That’s what can happen when you combine earnings and options, as we do for many trades in our Winning Edge service. So what’s the next opportunity on the earnings calendar? Well, it isn’t next week, which has nothing on the schedule. So we have to look to the week of July 11, which just happens to be the start of next earnings season with Alcoa (NYSE: AA) kicking things off after the close on that Monday.

Reporting along with Alcoa will be chip equipment maker Novellus (NASDAQ: NVLS), which hasn’t missed an earnings estimate in two years. Analysts expect a modest 15% EPS increase from a year ago, the smallest such increase in seven quarters. And the stock has done well after recent reports, gaining an average of 7.2% in the two weeks following the past four reports.

On the charts, the stock is bouncing higher after finding support at its 200-day moving average.  The move has pushed the stock above its key 20-day and 50-day moving averages.

Sentiment toward NVLS is tilted toward the skeptical. About 10% of the float is sold short and just six of 16 covering analysts consider the stock a “buy.” Along with the muted earnings forecast, NVLS appears to be a low-expectation play. With a nice technical bounce in progress and recent post-earnings success, we like NVLS as a bullish earnings play. Buy the NVLS August 35 Call for 2.50 or less.

Money-Doubling Options Trades from Earnings Hits & Misses

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