[Options] Okey Dokey
As you can see from this chart, $OKE is fixing for a breakout:
And equally important, implied volatility priced into call options is at the lowest levels its been since summer 2018! These are my favorite types of trades to enter -- simple long calls in stocks about to make all-time highs at low volatility. Yahtzee!
Let's get right to it.
Here's the Play:
We like buying $OKE July 82.50 calls for $1.25. These calls currently sport an approximately 25 delta and in my opinion the best strike to lever into a winner.
Risk is defined to the price paid to enter the trade and I'll be comfortable losing it all because I've sized my position accordingly. A close below 72.50 would invalidate my thesis for being long in this trade, and if that happens, I'll look to close any open position if there is any premium left in these options at that point (good chance there won't be).
If $OKE resumes it's march higher and breaks out to new highs, I'll look to close half of my position when I can do so for double what I paid -- so at approximately $2.50 per contract. Then we'll hold on into July (provided our stop loss isn't hit) and then make an assessment on where we stand in early July.
ASO subscribers, if you have any questions during the life of this trade, email me here.