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CVX breaks 13 Day EMA and heads for the 21 Day EMAMuch like most stocks, Chevron NYSE:CVX didn't have a good month of September this year, but it looks like things might be turning around. Looking at the daily chart above, CVX, as been trying to break past the 8 EMA average throughout the last month but found little success until yesterday. Today the price broke through the 13 day EMA. As the stock heads towards the 21 day EMA, one of two things can happen. It can pull up to it and continue down or it breaks past the 21 day EMA and continues going up. Rather than trade directionally, option traders should consider selling put credit spreads. Although this way cap the upside, it also limits your downside .
NYSE:CVXLong
by UnknownUnicorn6775423
Options Idea: Buy The Jan. 21, 2022 INTC 40.0 Call @ $13.90Intel just gapped down after its last earnings release as margins tightened from almost 60% last year to 53.3%. Trouble lies ahead as well since Intel’s 7-nanometer manufacturing is delayed which will give AMD a 6 month head start to eat away at Intel’s market share. Intel has responded by initiating a huge $10 billion stock repurchase program. This is in addition to the Oct 2019 repurchase program already in place, bring total repurchases to around $20 billion. Even though Intel is in trouble, we think there’s an opportunity for a longer-term play. Observe the historic Price/Sales ratio for Intel in the weekly view. We are buying today at 2.75. We’ve marked entries over the last few years at the 2.75 PS level. Every entry would have been successful over a 1 year holding period. The 50 week average on the PS ratio for Intel is 3.32. Nevertheless, we like to reduce risk with options, so we are not going long in Intel. We are buying a deep in the money LEAP call on Intel today at $13.90, which gives us unlimited profit potential above $53.90 and limits our losses below $40. Since this is such a long term LEAP call, we have 16 months (or 72 weeks) to sell monthly or weekly calls against this position. So while our current breakeven point is $53.90, we intend to lower our cost basis through the sale of out of the money shorter term calls. This is strategy is called the poor man’s covered call. The important point is that with a $53.90 breakeven, the lowest priced call we can sell is $54. If we sell a lower priced call and INTC were to rise too quickly, the trade could lose money. Selling next month or next week 15 delta out of the money calls should produce more than enough income to compensate us for the loss of dividends on this position and reduce our breakeven to $51, which is where Intel was trading today when we opened our long position. Our objectives for short call income generation against this position are as follows: Initial Objective: $2.90 (Extrinsic Option Premium), reduces breakeven point to $51 Secondary Objective: $4.55 (5 Quarters Dividends on 100 shares) Stretch Objective: $13.90 (100% of capital recovered) If we complete our initial objective we’ll have recovered our extrinsic option premium, giving us the benefit of going long in INTC at no additional cost. If we complete the secondary objective we’ll have not only recovered the option premium, but also generated 5 quarters of INTC’s $0.33 dividend, making our position equal to a long position in INTC, but at 20% of the capital outlay. And our final stretch objective is to recover $13.90 over the life of this call, recovering our capital early. Standard Exit : We exit the trade for a profit when the PS ratio on INTC approaches 4. Early Exit : We exit the trade for a profit as soon as INTC has recovered the 50-week moving average. 20-INTC-03 Opening Date: Sep 1, 2020 Expiration Date: January 21, 2022 DTE: 507 IV: 35.81% IV Percentile: 69% Odds of Winning: 32.60% (before selling short calls) Odds of Losing: 67.40% (before selling short calls) Win: > 53.90 @ Expiration (before selling short calls) Loss: < 53.90 @ Expiration (before selling short calls) Reg-T Margin: $0 (long position, uses $1390 cash) Chart Legend Green Area: 100% Win Zone. If we finish above or in the green area, we’ve made a profit on our call. This is a long call, so our potential gain is unlimited. Red Area: If we finish in this area we have a loss. The size of the red area is the size of our maximum loss. Since we’ve bought a call instead of gone long, we have no additional losses below $40. 1 standard deviation, 2 standard deviation, 3 standard deviation projections from Opening Date to Expiration Date are included. Follow us here on TradingView to get updates as we adjust this trade with the short calls we will be selling against this position.
NASDAQ:INTCLong
by OptionsCoach
10
TSLA - UP or DOWN?If there's one stock I had to name for being the most unpredictable, it's TESLA ( NASDAQ:TSLA ). This rather volatile stock is expected to have some pretty big moves going into market close today as the company will be holding their annual shareholder meeting at 4:30 p.m. ET. ...But wait...there's more! Once the meeting is over, the company will immediately follow up with their highly anticipated Battery Day event, which will be used to show those in attendance what's new with TSLA batteries and what improvements could be coming to make their batteries more energy efficient. So what does this mean for the stock? Well, for one, TSLA is a volatile stock, so major events like these... only increase implied volatility since everyone is expecting a big move either up or down. Second, The stock is trading dead smack in the middle between its recent highs and lows... the lows being most recent of the two. So, taking advantage of volatility is the way to go. Options traders can benefit from inflated options prices due to higher implied volatility by being option sellers. Strategies like Short Iron Condors, feature both, a capped risk and reward profile. Setting your strike selections near the recent highs and lows could be one way to trade TSLA... but the problem is that the inner strike are so wide making the risk to reward ratio very high. You can also sell credit spreads. To trade directionally, means to either go long calls or puts... Since Volatility is high, these strategies tend to be more expensive near major announcements. If you nail it, good for you. If you dont, then know that you can't lose more than what you paid for. If you still want to trade directionally, but want to minimize the risk, you can do debit spreads. This involves buying an option which will serve as your directional trade, and then selling that same type of option a few strikes further away to bring in some credit. This option might be good if you think that implied volatility will only increase after the announcement. Usually, the day following a major events, as with earnings announcements, options have been known to experience "volatility crush," in which the implied volatility drops after the news announcement. A drop in implied volatility can affect an option's price even more so than the movement of the underlying stock price. Therefore, directional neutral trades such a long straddles, will need to have a large move in the underlying in either direction to outpace the potential drops in implied volatility the next day. Which strategy will you choose? Remember...choosing not to trade can also be a wise trading strategy.
NASDAQ:TSLA
by UnknownUnicorn6775423
2
Target - Pullback tradeThe markets have been selling off over the past few days, leaving most of the sectors in the S&P 500 in the red. A stock that caught my eye today was Target. The discount store's stock prices have been trading near it's 21 day exponential moving average only dipping beneath it temporarily throughout intraday trading sessions. Despite the warning signs of what could be another big sell off, I choose to remain bullish on TGT and consider this to be a pullback trade setup. Of course, we might see price dip below the 21 as it has in the past...but that doesn't seem to be more than a day or two. If it does... then consider the possibility that Target is reversing rather than pulling back. Options speculators should consider the chance of a broad market selloff and at think about using spreads rather than directional plays. If you are trading the stock, plan your trade and trade your plan. Only you know what you can afford.
NYSE:TGTLong
by UnknownUnicorn6775423
AAPL to $130 or $110Labor days future action seems pretty bullish with world markets very green. AAPL had a hammer candle followed by an engulfing green candle (bullish), followed by a 3 bar play with a continuation green candle (bullish). We did however hit some resistance. If this trend continues, we should very quickly test $130 with a short squeeze, and possibly back to ATH. On the downside, if shorts come back into play, we will probably see $110. Hedge yourself on those calls.
NASDAQ:AAPL
by ncontelmo
1
Home Depot pulls back to the 13 EMAHome Depot ( NYSE:HD ) is pulling back along with the Dow today and is finding support at the 13 Day EMA as shown on the chart above. Could this be a pullback trade? I would like to think so, but as the SPY soars to new highs, we continue to be in an overextended market. I think Home Depot has the potential to continue higher provided that the SPY or DOW doesn't sell off. Even though SPY is made up of many other companies that have nothing to do with Home Depot, there is still market risk (also known as beta risk, systematic risk, undiversifiable risk) which is the risk that the stock will move along with the broader market. I will continue to monitor Home Depot to see if today's idea was a bullish pullback trade.
NYSE:HDLong
by UnknownUnicorn6775423
5
$AMD PT $91-$93 then to $100AMD is that darling that continues taking share from Intel. We have formed a bull pennant with an inside CH. Appears friday we hit the top of the handle. We need to break that $84-81 range to get continuation to my $93 target. This will then get picked up once again by robinhooders and should propel it beyond $100. My top price (which is insane) is $111 which ends up being exactly the 2.618 Fib extension level. Be ready!! the NVDA drive should start waking people up for AMD. Tread lightly though as i am anticipating a pullback in the market either this week or next.
NASDAQ:AMDLong
by ncontelmo
Applied Materials - Bullish pullback trade ?Applied Materials ( NASDAQ:AMAT ) has an interesting chart in that it tends to pull back below the 21 EMA on the daily chart. I tried to identify a clear area of support for each pullback, but it seems arbitrary. You can see the Keltner Channel falls just short of where the stock reverses the second time and the most recent pullback is actually pulling back to the 34 EMA which I initially did not want to put on my chart to avoid too many lines... but I figured, seeing is believing, so I put a big fat orange line to add to the chart. AMAT is an upward trending stock and has decent volume...approx 5 million shares traded today...I sorted the S&P 500 constituents by volume and AMAT was #19 in volume (#1 being highest volume which was GE). I did see other stocks that were pulling back as well, but something about their charts didn't convince me. OK prediction time... so based on what I see on the charts I think we might see AMAT find support at $62.65 ... from there I think its going to ride back up. It is oversold based on the 60 min time frame, but not quite there on the daily time frame... so keep an eye on it tomorrow. If it comes down to $62.65 or to the lower Keltner channel band I wouldn't be surprised... but be wary if it breaks below that. Those considering to go long now, might be a little early...or could be lucky and end up hitting it right on the nose because it doesn't tend to stray too far below the 21 EMA and today's red candle was a decent size.
NASDAQ:AMATLong
by UnknownUnicorn6775423