Buy Alert: October 11, 2013

Marcus Haber | October 11, 2013

Buy Alert: October 11, 2013

Trade Details

Buy Citrix Systems (CTXS) December $65 Calls for $1.50 or better

Why?

I feel sufficiently at ease about the debt ceiling situation that I’m ready to roll out a “regular” trade. That is, we’re going to buy calls in a stock that got severely oversold on negative news. But unlike some of our previous trades of this nature, we’re going to give ourselves plenty of time for the thesis to play out.

CTXS got hammered due to preannounced, lower than expected guidance. While that’s certainly not good news, not a single analyst has yet to downgrade the stock (and the stock is covered by 37 analysts!). Most analysts believe the impact of the company’s lower guidance will be minimal – and temporary.

Once the initial shock of this news has passed, value-seeking investors should return to CTXS, especially since analysts almost unanimously have the stock rated as a buy. As I just mentioned, we’ll use December options to give the scenario plenty of time to play out.