Trade Alert: Top Names

Taking advantage of today's market pullback.

Taking Advantage Of The Market Pullback

Three open bullish options trades of mine filled today with the market pullback. The first of them was a biotech stock we placed an order on last week.

The other two trades I placed orders on before that, but, as it happens, both stocks were on our top ten names list last night. The second one was a small cap I wrote about earlier last month:

The third stock I haven’t written about before, so I’ll tell you a bit about it here. This was a top name of ours initially back in July, and I bought the underlying shares then as part of our core strategy. It was a top name again last night, as I mentioned above.

Uniquely for one of our top names, it’s also inexpensive on a valuation basis. Chartmill’s overall valuation rating takes into account multiple metrics, including Price/Earnings, Price/Free Cashflow, Price/Book, Price/Forward Earnings, etc. This stock gets an overall valuation rating of 8 (out of 10) from them. A few more of its Chartmill ratings:

• Valuation: 8

• Profitability: 9

• Growth: 6

• Technical: 10 (Might be slightly lower after today’s drop)

When this name reported earnings in July, it beat on top and bottom lines. It’s scheduled to report earnings again in late October. The soonest options expiration after that is in mid-November, and the options market currently predicts a movement of about 14% in either direction by then. Our trade today is a bet that the stock gains about 11% by then.

If we’re right, we’ll make about 170% on this one (we’d make closer to 200% if we’re still right at expiration, but we’ll probably get out of this one in October). If we’re wrong, our max loss will be 100%.

Details below.

Today’s New Bullish Trade