BlackBerry (BBRY), the once (and future?) king of the smartphone market will join the earnings parade after the close of trading on Friday this week, and a considerable opportunity awaits those with a bullish stance on BBRY.

The consensus is forecasting a continued decline in earnings and revenue, with second-quarter BlackBerry earnings seen falling to a loss of 16 cents per share on revenue of $945.6 million. Overall, the sentiment on Wall Street is that BBRY’s report will be more of the same slow decline the company has experience before.

For savvy investors, however, this could translate into a trading opportunity.

There are several other factors potentially impacting BlackBerry stock this week. First, the company is officially unveiling the Passport smartphone today. The device is typical of BBRY phones, still sporting a keyboard despite the industry shift toward touchscreens — a clear play to BlackBerry’s small but loyal customer base.

The big potential mover in this week’s slurry of BBRY news could be any updates on the company’s release of BES 12. BES 12 is BlackBerry’s new business management system for mobile phones, allowing IT departments the ability to manage security on all company phones, including Apple and Samsung smartphones. While BBRY has ceded nearly all of its smartphone market share, the company still is respected for its security, and BES 12 has the potential to significantly brighten BlackBerry’s future.

Until indications of that future arrive, however, Wall Street is set to remain quite skeptical of the company. For instance, data from Thompson/First Call reveals that a whopping 34 of the 38 analysts following Blackberry stock rate the shares a “hold” or worse, compared to just four lonely “buy” ratings. Additionally, the 12-month consensus price target of $9 represents a discount to yesterday’s close at $10.56.

Of course, any positive data out of BBRY this week could spark a few upgrades or bullish price-target revisions.

Turning toward the short-selling crowd, we find a wealth of bearish bets levied against BlackBerry stock. In fact, some 89.1 million shares of Blackberry stock are currently sold short. With more than 18% of the stock’s total float sold short, the potential for a short-squeeze situation is considerable.

Click to Enlarge On the options front, it appears that some short sellers might be preparing for the worst. Specifically, the put/call open interest ratio for the front three months of options arrives at 0.41, with call open interest more than doubling put open interest in the September, October and November series. Since calls are often used as hedges for short stock positions, it is possible that much of these open call contracts are being used as protection instead of actual bets that BlackBerry stock will rally.

Taking a closer look at BBRY’s options data reveals that weekly September options are pricing in a potential post-earnings move of nearly 14%. This places the upper bound at $11.61, while the lower bound lies at $9.39.

A downside move leaves BBRY with support at the $9 level as a backstop, while a rally to the $11.50 region could push BlackBerry stock past short-term technical resistance, thus providing a spark for a short-covering rally.

Bull Call Spreads on BlackBerry Stock

BlackBerry stock has potential for a considerable upside move, so those traders willing to take on some risk might want to consider entering an Oct $10/$12 bull call spread.

At last check, this spread was offered at 76 cents, or $76 per pair of contracts. Breakeven lies at $10.76, while a maximum profit of $1.24, or $124 per pair of contracts, is possible if BBRY closes at or above $12 when October options expire.

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