Trade Summary: May 11, 2015
May 11, 2015
Trade Rationale
Hard to believe but we’re already in mid-May… summer’s almost here! Not sure what happened to the spring, but hard to ignore the rising temperatures. More importantly, it’s also hard to ignore the fact that kids are going to be out of school in about two weeks!
So with summer vacation fast approaching, what can we expect from the stock market?
Well, we know there’s going to be a lot of family time, vacations, and pool parties. But you know what? All those things involve spending money in one form or another. Things like gasoline, food and drink, and outdoors goods are going to be in high demand – especially since a lot more people actually have money to spend this summer.
As such, we’re going to buy calls in three stocks which should thrive during the summer vacation period.
We’ll get things started off by buying calls in Target (TGT). Is there a more visited summer destination than your local Target store? Everything from clothing to swim supplies to outdoors gear to food – you can get it all at Target. I predict a big summer is coming for the retail giant.
Another summer stock I like is Starbucks (SBUX). What goes better in hot summer weather than an ice cold Frappaccino? Not only is the ultra popular coffee shop offering new flavors of summer drinks, but they’re also adding a new mini size. That will appeal to parents who don’t want their kids to overdo it, and those who want to continue to fit into their swimsuits.
Finally, we’re going to take a bullish position on an oil giant. Gasoline prices tend to go up for the summer vacation season, and big oil companies clearly benefit. Chevron (CVX) looks like a good bet here, and hasn’t seen a pre-summer bump in its share price just yet.
Trade Details
#1) Buy Target (TGT) July 17th 82.50 Calls up to $1.90
For this trade, we’re looking for an up move in TGT. Our first profit point for conservative traders is at $85. For aggressive traders, you can hold up to $87.50. For risk control, the conservative exit level is $76. $72.50 is the final exit level for aggressive traders.
#2) Buy Starbucks (SBUX) October 16th 52.50 Calls up to $1.80
With this trade, we’re also looking for an upward move. Our first exit point for conservative traders is at $55. For aggressive traders, you can hold to $57.50. For risk control, the conservative exit level is $45. And, $42 is the final exit level for aggressive traders.
#3) Buy Chevron (CVX) July 17th 110 Calls up to $2.15
Finally, we’re looking for a bullish move in CVX. Our first profit-taking exit point for conservative traders is at $112. For aggressive traders, you can hold to $115. For risk control, the conservative exit level is $100. $95 is the final exit point for aggressive traders.
Category: AOA Trade Summary
