To quote George Harrison, “it’s going to take money, a whole lot of spending money” for Pandora Media Inc (NYSE:P) to do it right. That “it” is recovering lost subscribers to the likes of Spotify and Apple Inc.’s (NASDAQ:AAPL) Apple Music. Tonight, the company will see how much patience (and time) investors are willing to invest in Pandora stock, while waiting for this recovery.

After the close of trading this afternoon, P will step into the earnings confessional to release its fourth-quarter report. The pre-earnings backdrop for Pandora stock doesn’t look very promising. Pandora has posted a loss in the past seven quarters, and it is expected to do so again tonight. Wall Street is looking for a loss of 7-cents-per-share on revenue of $376.43 million.

In the same quarter last year, Pandora lost 14-cents-per-share, but revenue was higher at $392.60 million. With spending on the rise to recover lost listeners, another decline in revenue is more than likely.

That said, there is a bit of optimism for P stock heading into the event. EarningsWhispers.com reports the whisper number as a loss of just 5-cents-per-share. Still, even hitting this figure could leave a sour taste in investors’ mouths if the company hemorrhages cash with no meaningful results.

Sentiment for Pandora stock is quite bearish. According to Thomson/First Call, only 11 of the 29 analysts following P stock rate it a “buy” or better. Additionally, more than 30% of Pandora’s float was sold short as of the most recent reporting period.

Pandora stock options traders are also leaning bearish. Currently, the March put/call open interest ratio rests at 0.81, with calls nearly in parity with puts among front-month options. Since options traders tend to favor calls on sub-$10 stocks, this is a considerable buildup of put OI on Pandora stock ahead of earnings.

Overall, weekly Feb 23 implieds are pricing in a potential post earnings move of about 16% for Pandora stock. This places the upper bound at near $6.20, while the lower bound lies at $4.50.

Technically, Pandora stock is dangerously near overbought levels. The shares have rallied off a near-term lows near $4 and found support in the $4.50 range during a recent pullback.  However, $5.50 could be a significant technical resistance level for Pandora stock. With the shares on the verge of being overbought ahead of earnings, and Pandora set to report a loss once again, a bearish play may be quite profitable.

Two Trades for Pandora Stock

Put Spread: Traders looking to bet on a reversal or a sell-on-the-news event for Pandora stock might want to consider a March $4.50/$5 bear put spread. At last check, this spread was offered at 18 cents, or $18 per pair of contracts. Breakeven lies at $4.82, while a maximum profit of 32 cents, or $32-per-pair-of-contracts — a potential return of 77% — is possible if Pandora stock closes at or below $4.50 when March options expire.

Call Spread: On the other hand, a positive outlook from Pandora could offset current quarter and spending concerns. If the market has enough patience to wait out heavy spending, signs of returning subscribers could spark an unwinding of bearish sentiment.

Traders taking the optimistic track might want to consider a March $5.50/$6 bull call spread. At last check, this spread was offered at 19 cents, or $19-per-pair-of-contracts. Breakeven lies at $5.19, while a maximum profit of 31 cents, or $31-per-pair-of-contracts — a potential return of 61% — is possible if Pandora stock closes at or above $6 when March options expire.

As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.