The earnings pickings are getting pretty slim this week, as just five or so S&P 500 companies are on the docket. But one certainly has some promise, if only because one of its main competitors had a solid report last week. Options trading investors should take note.

The company is Family Dollar (NYSE: FDO), which reports Wednesday before the open. Analysts expect about a 20% increase in per-share profits from a year ago. That’s in line with what the company has done for the past year. So not much to read there.

One thing that FDO does is move after earnings. Over the past four quarters, the shares have moved more than five percent on average in just the one day after reporting. The problem is that two were up and two were down. So there isn’t any pattern to bank on other than the stock should move on Wednesday.

Earnings from competitor Dollar General (NYSE: DG) could give us a glimpse of what to expect. The company easily beat on the bottom line last week and the shares jumped on the news. It’s clear that consumers continue to pinch pennies, especially with higher food and energy prices tugging at their wallets. That means more customers streaming through discount retailers’ doors.

The other factor that tilts us toward the bullish camp is that sentiment is hardly showing overflowing optimism toward FDO. The put/call ratio is spiking to near an annual high, as put volume is picking up steam. The last time the ratio was this high was in September, right before the stock went on to rally more than 20% in three months. And just eight of 23 analysts rate the stock a “buy,” leaving plenty of room for upgrades.

With expectations muted at best, a history of moving sharply after earnings, and results from competitors showing strong fundamentals for the deep discount space, FDO is looking solid heading into its report on Wednesday. Buy the in-the-money FDO April 50 Call for around three bucks to take advantage of the expected post-earnings strength.

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