I can’t give individual investment advice but I can share my thoughts on that: Buying puts on a stock that you believe will likely drop just before they report, assuming the premium isn’t too high, can be an effective strategy that helps mitigate risk vs. shorting the shares.

If you short the stock & it gaps way up tomorrow after they report, that could bypass even the best-placed stop-loss or stop-limit order, potentially resulting in a much larger loss than one originally was allowing for.

If you bought puts, again assuming at a decent price, you have limited your loss to the cost of the put (if it expires worthless). As such, one could purchase the same amount of a put that they might normally risk, if stopped out, on shorting the shares. One could also use a paired options strategy to limit downside risk, as well.

I’m in the Pacific Nw and this year we have a 100 mil. budget short fall. If the government decides to reduce our funding (highly likely) it could get ugly fast.

I believe that one of the biggest risks to the market right now is the under-pricing of risk in the credit markets (e.g.- credit spreads/differential between Treasuries & junk bonds; default risk of various corp & muni bonds, etc..)

That’s the fundamental reason for a short on AGO (largest muni bond insurer). The economy is humming along right now but IF (and a big IF) my call for a 40-50% drop in the stock market plays out & starts playing out soon, then that (the sudden & swift wipe out of the wealth effect) will be the reason for the recession that virtual no economists or analysts can see coming this year.

Again, those are fundamental ramblings. The technical case for the trade was made in the post above. My preference: A starter short here today in front of earnings; not enough to hurt me on a big gap up but enough to have a position that would already have some nice embedded gains on a big gap down tmrw, making it easier to add to that existing short position vs. trying to chase it down & risk shorting into a false breakdown that reversed & puts me underwater quickly.

Nothing ventured, nothing gained.