Trade Summary: May 23, 2016

| May 23, 2016

May 23, 2016

 

 Trade Rationale

Earnings season is pretty much done and the market is looking like it’s ready to take the summer off.  Now, we’re more than likely to get some action over the summer at some point.  But right now, I wouldn’t be surprised to see a whole lot of sideways action.

Once again, there are still plenty of opportunities in a sideways market to make money.  Individual stocks still go up and down all the time… it’s only the general market direction that’s neutral.  As such, we’ve determined two more stocks worth taking a bullish bet on, and one we have a bearish outlook for.

The two stocks I like are highly recommended by analysts, but have underperformed to this point for one reason or another.  The stock we’re buying a put on is not an analysts’ favorite and looks a little rich at current levels.

The first company to buy calls on is Aceto (ACET).  ACET produces pharmaceutical intermediates and active ingredients for things like nutraceutical products and agricultural protection.  The company recently posted decent earnings and has started moving higher.  Based on my analysis, I think it could have a lot more upside.

Next, we’ll buy calls in Under Armour (UA).  UA is an athletic apparel giant and has been a darling of the stock market until recently.  However, the stock is still strongly recommended by analysts across the board.  What’s more, now that the stock has split, it looks a lot cheaper to those investors who are price sensitive.

Finally, we’re going to buy puts on Apache (APA).  APA has made a decent recovery from its lows earlier in the year on the heels of the recovery in oil prices.  However, the stock price now appears to be a bit on the frothy side.  Oil’s recovery is bound to slow down and APA could be one of the first to give back gains.

 

Trade Details

#1) Buy Aceto (ACET) August 19th 22.5 Calls up to $1.40

For this trade, we’re looking for a move higher in ACET.  Our first profit point for conservative traders is at $24.  For aggressive traders, you can hold up to $26.  For risk control, the conservative exit level is $19.50.  $17.50 is the final exit level for aggressive traders.

Aceto

#2) Buy Under Armour (UA) July 15th 37.50 Calls up to $2.15

With this trade, we’re also looking for the stock to climb.  Our first exit point for conservative traders is at $40.  For aggressive traders, you can hold to $42.50.  For risk control, the conservative exit level is $35.  And, $32.50 is the final exit level for aggressive traders.

Under Armour

#3) Buy Apache (APA) July 15th 55 Puts up to $2.30

Finally, we’re looking for a move down in the stock price.  Our first profit-taking exit point for conservative traders is at $53.  For aggressive traders, you can hold to $51.  For risk control, the conservative exit level is $60.  $62 is the final exit point for aggressive traders.

Apache

 

Category: AOA Trade Summary

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