A strategy idea for options trading investors.
Well it looks like the bulls� gravy train is running right into the long holiday weekend.� With Mr. Market gifting the bulls with their biggest four day gain in months many stocks have been sailing higher. In seeking fresh setups still providing low risk high reward opportunities I came across the agriculture giant Deere (NYSE: DE). From a technical perspective DE has formed a classic rounded bottom and is on the verge of breaking above a key resistance level — $83.
On a confirmed break of $83 traders may consider entering bullish option plays on DE to exploit a further rise in the stock. Aggressive traders could stick with a simple long call play — buy the DE Aug 80 Call. Conservative traders could enter a call spread by buying the Aug 80 call and selling the Aug 85 call. Check an option chain for current prices.
I would exit the trade at a loss if DE breaks back below $80.
DE reports earnings on August 17 so traders not willing to face the potential of an adverse gap should exit any positions beforehand.
Source: MachTrader
At the time of this writing Tyler Craig had no positions on DE.
Follow Tyler Craig on Twitter@TylersTrading.
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