Finally, a setup I love that has earnings out of the way! There's light at the end of the tunnel. And no surprise I find this setup in a strong sector that wants to lead the market higher.
We're going to leverage some cheap options to position for a breakout to 52-week highs in this big cap name.
My man Steve Strazza's reaction to this trade idea: "Yes! Bios have got some catch-up to play!"
I concur.
Though, I think we've got some overhead resistance that may slow the roll heading into summer. But that's ok -- we can use that to our advantage with a calendar spread.
There are some big cap software stocks on the verge of resolving out of beautiful bases to the upside. Of course, we have to be on the ball to avoid earnings landmines as it's that time of the year.
That said, my favorite chart among these big caps that still has breathing room in it (about six weeks) before we have to deal with their next earnings report is Salesforce $CRM.
Fair warning: today's trade is in a company that will be reporting earnings early next week. I generally try to avoid entering trades ahead of earnings. But its that time of the season where its kinda hard to avoid earnings. They are happening. We just have to deal with it.
That said, we'll control what we can control: The amount of risk we take, and our time duration for the position to recover, if needed.
McDonald's just put "300-dolla-rolls" on the menu. Sweet and delicious. Limited time offer.
Many of you know that my all time favorite options trades are simple long calls on stocks making new all-time highs. And when you add in a big round number up ahead within spitting distance, it's hard for me not to get excited.
So we're going to put on a short-term play to catch those rolls in $MCD while they're hot!
We got into and quickly out of a trade in Microstrategy $MSTR over the past two weeks. Whipsaws suck. But the way the stock has quickly battled back is telling me we weren't wrong, just early. And I'm getting back in, but with a new stop loss level.
The thing about options is that participants in these markets are very good at pricing in expected moves. You'd be amazed at how often the options market nails the expected move in an instrument before it happens.
Like point spreads in sports betting, it's amazing how often they nail it.
But when options are mispriced, meaning traders are not expecting something -- that's where big wins can happen for those who position accordingly.
We think one such opportunity is presenting itself in the consumer staples corner of the world. And if we get right, we might have a 20-bagger on our hands.
We're still in premium-selling mode until the market calms down.
That said, we're not taking any wild risks. This time, we're targeting the relatively tame utility sector and defining our risks. April expiration will become the "front-month" next week, so this delta-neutral spread should pay relatively quickly if the trade works.