American Science and Engineering (ASEI) Earnings Play 2/9/10

American Science and Engineering, Inc. (AS&E) develops, manufactures, markets, and sells X-ray inspection and other detection solutions for homeland security and other targeted markets. AS&E provides maintenance, warranty, research, engineering, and training services related to these solutions. The Company manufactures X-ray inspection products that can be used to inspect parcels, baggage, vehicles, pallets, cargo containers, and people. It sells its products to a variety of customers, including authorities responsible for port and border security, military organizations, high threat commercial and government facilities, aviation security agencies and legal enforcement agencies. 


I am looking for a blow-out quarter and raised future guidance.  This company is a huge beneficiary of Obama's plan to ramp up security in airports across the nation.  Here is the recent history of the order flow:


Jan 4 - $39.7 million order for Cargo X-ray Inspection Machines (this was from unnamed govt)
Jan 5 - $5.8 million order for Cargo Security Equipment in the Middle East
Jan 5 - UK Minister announces that ASEI equipment will be installed at Heathrow airport in London, UK
Jan 5 - Bloomberg reports Canada to install ASEI body scanners all over Canadian airports


Another important thing to keep in mind is on June 14, Accuray (ARAY) announced a partnership with ASEI to supply various screening equipment.  On Feb 5, ARAY reported a blow out quarter and the stock was up over 10%.  


And lastly, technically, the stock is sitting at very strong support lines: 1) right at the support of rising long-term trend line; 2) right at the cusp of prior breakout resistance which is now support; and 3) right at 50-day moving average.  


So, the stars are clearly aligning for a major move the upside.  But I still want to play it cautiously because this market has no memory from day to day.  I want to do the following calendar spread:


- Buy to open March $80 calls
- Sell to open Feb $80 calls


I just filled half of my order for $0.95 and half for $1.00 debit.  Feb implied volatility is at 43 vs. March at 33.  


Good luck!