Playing the rebound. It can happen in sports, in love and in stocks. Or, perhaps, in a combination. Take Hewlett-Packard Company (NYSE: HPQ), which plunged on news of a sexual harassment scandal that caused its CEO to resign last week. Juicy stuff for the headlines, and maybe for your portfolio.

The stock appears to have found a base at the $40 level. And it just so happens that HPQ reports earnings Thursday after the close. What an opportunity for the stock to rebound sharply from support.

Also note on the chart that the stock reached oversold levels, according to the Relative Strength Index (RSI), last seen in early July, just before a solid rally.

Besides the technicals, we also like the fact that the whisper number is a full 10 cents below the consensus analyst earnings expectation. Nothing like lowered expectations right before earnings. 

HPQ may not blow out estimates with its report, but it hasn’t missed an estimate in six years. With the whisper number so low, we could see a pop on a mild earnings beat. That should add fuel to the technical rebound that seems to be taking over the share price.

Jump on HPQ now with the September 40 or 41 calls. Whatever the cause of the rebound, take advantage of the bounce higher.

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