Optioneering Newsletter
August 28, 2016
The Dow Monthly
No new record high this week, but there’s no sign of a top. Last month’s close above the 2015 high is solid evidence that the trend is up and the up
The first profit opportunity we will consider this week is in SPXL. SPXL is the Direxion S&P 500 3X Bull ETF. SPXL seeks to yield results that
correspond to three times the daily performance of the S&P 500.
SPXL Monthly
The monthly chart shows that SPXL was in a very strong bull trend from late 2011 until last year’s high. After that, SPXL had a deep pullback, a strong rally, a deeper pullback, and another very strong rally. Last month’s
close above the 2015 high suggests that SPXL could still be in the early stage of a big bull move.
SPXL Daily
The daily chart shows that SPXL has been very bullish since the June low. This week’s dip back to the Mid-Line of the Keltner channel gives us a new
buying opportunity.
SPXL is a leveraged ETF. While leveraged ETFs contain more risk, they usually possess higher premiums as a result. We suggest taking advantage
of the high premiums offered by initiating option debit spreads.
Traders who want a more leveraged approach could consider buying SPXL calls. SPXL has options expiring in September, October, November,
Buy to Open SPXL October 21st expiration 80-strike Call Sell to Open SPXL October 21st expiration 90-strike Call
We can see from the Call Option Spread Analysis Calculator that if the SPXL ETF price declines by -7.5%, stays where it is, or increases in price
when the options expire, the spread will make a 25% or $200 profit.
The next profit opportunity we will review is in AYI, or Acuity Brands, Inc. Acuity is one of the world’s leading providers of indoor and outdoor lighting
AYI Monthly
The monthly chart shows that AYI has been in a very strong bull trend since 2011.
AYI Daily
The daily chart for AYI has a bullish pattern of higher highs and higher lows since the February low. Every pause or pullback has been followed by a
rally to a new all-time high. The current pause gives us a new buying opportunity.
We are going to review a Call Debit Spread for AYI.
Traders who want a more leveraged approach could consider buying AYI calls. AYI has options expiring in September, October, November, and
Buy to Open AYI November 18th 240-Strike Call Sell to Open AYI November 18th 250-Strike Call
We can see from the Call Option Spread Analysis Calculator that if the AYI stock price declines by -7.5%, stays where it is, or increases in price when
the options expire, the spread will make a 29% or $225 profit.
The next profit opportunity we will review is in COHR, or Coherent, Inc. Coherent is one of the world's leading suppliers of laser and
photonics-based solutions to a broad set of commercial and scientific research customers.
COHR Monthly
The monthly chart shows that the Coherent stock price has been going straight up since last year’s low.
COHR Daily
As usual, the daily looks a little choppier than the monthly chart. The longer time frame (the monthly) tends to smooth out choppier short-term trading.
Despite the choppier chart picture, the daily chart for COHR has a clear pattern of higher highs and higher lows. The pullback to the Mid-Line of the
Keltner Channel is a buying opportunity.
We are going to review a Call Debit Spread for COHR.
Traders who want to employ a more leveraged approach can buy COHR calls. COHR has options expiring in September, October, November, and
Buy to Open COHR November 18th 90-strike Call Sell to Open COHR November 18th 100-strike Call
We can see from the Call Option Spread Analysis Calculator that if the COHR stock price declines by -5%, stays where it is, or increases at all when the options expire, the spread will make a 26.6%, or $210 profit. If the
COHR stock price is down -7.5% when the options expire, the spread will make 21.8% or $172.
The last profit opportunity we will review is in ICUI, or ICUI Medical, Inc.
ICUI Medical is a California-based company with global operations that develops, manufactures, and sells medical technologies used in vascular
ICUI Monthly
After a normal but deep 3-wave pullback from last year’s high, ICUI has been very strong this year. ICUI hit a new all-time high this month. New
ICUI Daily
The daily chart for ICUI has a nice bullish pattern of higher highs and higher lows. The current pullback is expected to yield to a further advance.
We are going to review a Call Debit Spread for ICUI.
Traders who want to employ a more leveraged approach can buy ICUI calls. ICUI has options expiring in September, October, November, and
Buy to Open ICUI October 21st expiration 110-Strike Call Sell to Open ICUI October 21st expiration 120-Strike Call
We can see from the Call Option Spread Analysis Calculator that if the ICUI stock price is down -2.5%, stays where it is now, or increases in price when
the options expire, the spread will make 28.2% or $220. If ICUI is down -5% when the options expire, the spread will make 18.8% or $146. If the ICUI stock price is down -7.5% when the options expire, the spread will
lose -21.5% or -$168.
EARNINGS SEASON: There are four “Earnings Seasons” a year. The seasons begin in January, April, July, and October and they each last about two months. The earnings reports can have an impact on the stock
price. We don’t know if the impact is going to be positive or negative (or nothing at all). It’s up to you to decide if you want to be in a trade when the
earnings report is announced. Here’s a link for a page that can help you keep track of the report dates:
https://www.earningswhispers.com/calendar
Note: Profit performance displayed in this newsletter does not include transaction costs.
This newsletter includes some trading ideas following Chuck Hughes’ trading strategies along with educational information. For a complete listing of Chuck’s exact trades, including specific entries and exits and real time Portfolio tracking,
