We may be between seasons, but next week offers up a number of interesting earnings reports, especially among tech companies. One of note is Red Hat, Inc. (NYSE: RHT), the provider of open source software.

RHT reports earnings after the close on Tuesday, June 22, with analysts expecting a 20% profit increase from last year. If it happens, that would mark the first such year-over-year increase in five quarters. Recent findings from the ChangeWave Alliance Research Network suggest that the corporate software spending outlook is the strongest in three years. That bodes well for the Red Hats of the world.

One thing we like about RHT is that it moves impressively after earnings. In fact, over the past four quarters, RHT has moved an average of 7% in just the day after the report. That’s the kind of move that warms options players’ hearts.

Currently, the stock is on a strong run, gaining about 15% in the past week. That move has the shares sitting above the April high. More importantly, the stock is now battling to take out its high from May 2006. Should earnings give the stock a boost, it will be clear sailing above.

On the sentiment front, 58% of covering analysts rate RHT a “buy,” which leaves room for upgrades. Also, the stock is sitting above the heaviest call open interest strikes, so option-related resistance should be minimal. Overall, we like the sentiment setup for a post-earnings pop.

With post-earnings moves by RHT usually quick and decisive, there’s no need to buy more time than necessary in the option. Go with a near-the-money July call, which should provide ample leverage for the expected move higher.

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