Walter Industries (WLT): As Chinese and Indian demand for coal remain relatively robust despite the economic recession, Walter Industries, which is down over 60% from its 52 week high of $115 per share could get an earnings pop. With the stock at $21.45, I would buy the stock and sell the upside $22.50 calls for $0.85 cents, thus creating a net-long position at $20.60.

Chesapeake Energy (CHK): The largest natural gas producer in the United States could move higher as rumors surrounding an additional land sale to BP (BP) coupled with earnings clarity may move the stock higher.

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Transocean (RIG): Transocean’s earnings are particularly interest despite the substantial drop in crude oil prices, as deepwater day-rates for oil rigs are still north of $500,000 per day. I expect a decent quarter with weak guidance, thus a trader may want to consider the following: Buying shares of Transocean at $60 flat, selling the $60 calls for $2.05, and buying the $55 puts for $0.45 cents---this is income generating strategy generally works well for earnings trades.

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