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Chart of Day: Aetna (AET) Showing Gains in a Day

Oct 17, 2017

Just yesterday, we noted:

Health care stocks took a hit after President Trump signed an executive order that’s designed to increase competition and choice.  According to the White House, the action would give Americans more access to affordable coverage.  As a result, health care stocks like Aetna (AET) took a hit the other day. However, we have to remember that it could take months for new regulations and guidance to carry out the signed order.  That tells us traders may have overreacted, unfairly sending stocks like AET down too soon. We believe we’re being offered a good opportunity here to buy stocks like AET on the cheap. We can buy the AET stock here as well as the AET January 2018 155 calls at market prices.

At the time, those AET January 155 calls traded at just $4.75. Today, as the underlying stock rallies close to $4 a share, those calls are up to $6.50. That’s good for a win of 37% in a day’s time. Consider selling to close half to secure the win.

Chart of Day: Health Care Stocks go on Sale

Oct 16, 2017

Health care stocks took a hit after President Trump signed an executive order that’s designed to increase competition and choice.  According to the White House, the action would give Americans more access to affordable coverage.  As a result, health care stocks like Aetna (AET) took a hit the other day. However, we have to remember that it could take months for new regulations and guidance to carry out the signed order.  That tells us traders may have overreacted, unfairly sending stocks like AET down too soon. We believe we’re being offered a good opportunity here to buy stocks like AET on the cheap.

We can buy the AET stock here as well as the AET January 2018 155 calls at market prices.

 

Chart of Day: How to Trade the 'Star Wars' Effect

Oct 10, 2017

This is an interesting trade idea.

Disney (DIS) may have its share of problems with ESPN at the moment, but with the latest installment of Star Wars set for December 2017 release, we may begin to see signs of life in the stock. The force, as they say, may be strong in this one. Sorry, I’m a big fan of the movie.

As we saw prior to the release of the December 2015 installment, shares began to rocket higher, falling after the release of the movie. Anticipation drove it higher. Once that anticipation effect faded so did the stock. We see this sort of thing happen all the time when trading news.

At the moment, we believe DIS is aggressively oversold and could begin to push higher on anticipation of the movie. It may sound like a nutty idea, but we often see it work well.

There are two ways to trade such an opportunity.

One, we can buy just the stock here around $99.50 and hold. And two, we can buy to open the DIS December 15, 2017 100 calls at market prices.

Chart of Day: The Amazon Effect Strikes Again

Oct 09, 2017

We are watching two new opportunities.

Should they pan out as hoped, we may look to issue them tomorrow morning, including Walgreens (WBA) and CVS (CVS).

Both took a hit after Amazon announced it could enter the prescription drug market, hoping to improve on price transparency and costs.   We don’t think such a move on Amazon's part will happen, though, because of the significant regulatory hurdles it’d have to jump. For one, such a move would not be cheap. And two, it could take years and billions of dollars to potentially make it happen.

Even CVS CEO Larry Merlo has noted that the mail order pharmacy business has been on the decline in recent years.

While none of that is cooling investor fears with WBA and CVS, we believe that if we time our potential entry right, we could do well with both stocks. Stay tuned for that.

 

Chart of Day: One of the More Controversial Trading Ideas

Oct 05, 2017

After a big move from lows of $19.84 to $120 a share in less than two years, Shopify (SHOP) fell victim to a short-selling article from Citron Research, which claims SHOP is a “get rich quick scheme.”  Interesting to note, Citron took a short position in the stock, perhaps prior to this article going to print.  That says a lot.

And while we’re likely to see further pullback in the stock today, as fear runs amok, we still see opportunity to buy now, as it catches potential support at its 50-day moving average.  It also doesn’t hurt that the company is now fighting back against this short sellers’ claims.  Buy to open SHOP November 17, 2017 105 calls. 

What we’d like to see here is a near-term recovery to $106.  

 

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