On May 7, 2018, we noted:
After poor earnings, the stock gapped lower from $145.85 to $132.50. However, it looks as if most of the negativity has been priced into the stock, as it catches support. Several analysts appear to agree that it's now oversold. Its Outperform rating was just reiterated at Barclays, Credit Suisse and Morgan Stanley. Deutsche Bank even raised its rating from a hold to a buy. From its current price of $132.50, we'd like to see a bearish gap refill, near-term. Buy to open the EL July 20, 2018 135 calls at market prices.
At the time, the EL July 20, 2018 135 calls traded at just $4.85. With EL now at $140.19, the calls are at $8.03. Sell to close half for a very quick win of 66% in days. All we had to do was trade when RSI fell under its 30-line, as MACD fell to a historic low, as Williams’ %R fell under 80, and as the stock challenged its lower Bollinger Band (2,20). Easy.
