We are just two weeks away from the day when Americans gather with their families to consume over 45 million turkeys. Butterball, the largest producer of turkey products in the United States, is a subsidiary of privately owned Seaboard Corporation, but another type of poultry has piqued my trading interest.

Turkeys are always a hit during the holidays, but the real story here is growing global meat consumption, specifically poultry.

According to the agricultural outlook from the Organisation for Economic Co-operation and Development and United Nations’ Food and Agriculture Organization, poultry will overtake pork as the most consumed meat in the world by 2020.

In the United States, chicken is already the No. 1 consumed meat, surpassing pork in 1996, and overtaking beef in recent years.

Tyson Foods (NYSE: TSN) is one of the world’s largest meat processors and the second-largest food production company in the Fortune 500. It provides 21% of all chicken produced in the United States, which accounts for nearly one-third of its revenue.

Tyson provides birds, feed and technical advice to poultry producers, who provide labor, housing and utilities. While the growers are insulated from changes in commodity prices for chicken and feed ingredients, Tyson is highly sensitive to them.

Luckily for Tyson, meat prices climbed to record highs this year, with the Department of Agriculture (USDA) forecasting poultry prices will increase 3.5% in 2014. And corn and soybean prices have fallen 13% and 19%, respectively, so far this year on calls for record harvests in the United States.

These trends should translate into increased profits for Tyson, and investors have pushed shares up more than 20% year to date. This week, shares are down after the USDA revised its corn crop estimate slightly lower, providing us with an advantageous entry point.

As we move into the holiday season, a relatively healthy economy, higher meat prices and cheaper grain prices all bode well for Tyson, which is scheduled to release its next quarterly earnings report on Nov. 17.

My proprietary earnings algorithm, which examines stock chart patterns, option volatility, volume and analyst actions, predicts the company will report in-line revenues of $10.15 billion, and beat EPS estimates of $0.76. Further, I expect management to issue positive guidance based on favorable commodity price trends.

On the charts, TSN has traded in a bullish channel since its June lows, with a larger bullish wedge pattern forming from the early April highs.

I see shares revisiting their late-May high of $44 following next week’s earnings announcement. This target sits about 8% above current prices, but using a call option strategy, we can leverage that move into 58% potential gains in two months or less.

TSN Call Option Trade

Today, I am interested in buying TSN Jan 38 Calls for a limit price of $3.80.

Risk graph courtesy of tradeMONSTER

This call option has a delta of 72, which means it will move roughly $0.71 for every dollar that TSN moves, but it costs a fraction of the price of the stock.

The trade breaks even at $41.80 ($38 strike price plus $3.80 options premium), which is 2.8% above current prices.

If TSN hits my $44 target, the call option will be worth at least $6. Once you enter the trade, place a good ’til cancelled (GTC) order to sell your calls at that price.

For our stop-loss, we will use the 200-day moving average (MA), currently at $39.30, as our guide. If TSN closes below this level, sell the call option the next day if the stock does not bounce back above it.

Recommended Trade Setup:

— Buy TSN Jan 38 Calls at $3.80 or less
— Use 200-day MA as a stop-loss guide
— Set price target at $6 for a potential 58% gain in two months

If you have a question or comment about today’s strategy, please send it to[email protected].