Earnings Preview: OCZ Technology Group & How To Trade It

OCZ Technology Group Inc. OCZ is set to report earnings tonight after the bell, and Wall Street will be looking forward to hearing about the solid state drive (SSD) industry, and how the company is competing with Fusion-IO FIO in the space, as well as any potential quality issues. At last check, shares of OCZ Technology were trading at $8.11, down 8 cents or just under 1% on approximately 500,000 shares. Analysts are looking for a loss of 1 cent per share on revenues of $69.43 million, which would imply 100% revenue growth. Guidance for next quarter is expected to come in at 3 cents per share on $76.84 million in revenues, which would be a rise of 102% over the same quarter a year ago. OCZ Technology Group, designs, develops, manufactures, and distributes computer components for computing devices and systems worldwide. It primarily offers solid state drives, flash memory storage, memory modules, and thermal management solutions. ACTION ITEMS:

Bullish:
Traders who believe that OCZ Technology will report strong earnings might want to consider the following trades:

• Obviously going long OCZ prior to the earnings call is the most direct way to profit from a strong quarter, but it is also the riskiest.

• Traders can also go long long-dated calls on the name, perhaps a September or October strike if they believe that this quarter is likely to be a little rocky, but guidance will come in strong.

• Traders can also play the space by going long Fusion-IO, which is likely to see some sympathy buying, should OCZ report strong earnings.

Bearish:
Traders who believe that that OCZ Technology is likely to falter may consider alternate positions:

• Shorting OCZ is the obvious one here if traders believe the company is likely to falter. The company has a high short interest, at 27.7% of the float sold short. If the company falters, the shorts are likely to press.

• Traders can go long Fusion-IO if they believe the company is going to take market share away from OCZ.

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