Cash Cow Newsletter February

Transcription

1 Cash Cow Newsletter February In this week s Cash Cow newsletter we are going to start off by looking at the recent price action in the S&P 500 Index: The S&P increased a modest.29% since last Thursday's close. Today's volatile session left the index near the upper Keltner Channel. All the major U.S. Indexes are still in a 50/100-Day EMA uptrend that's confirmed through the presence of an up-sloping On Balance Volume. Last week we had three profit opportunities: MDSO, EWZ, and CAMP. Since Thursday s close MDSO has gained 3.5%, EWZ gained.37%, and CAMP gained 3.36%. With the U.S. Indexes trading near their upper Keltner Channels, it would be prudent of us to consider utilizing both spread strategies and a call purchase strategy for the March 22 nd 1

2 expiration. Using spread strategies would offer us greater downside protection in the event of a market correction. The first profit opportunity we will look at this week is JAZZ (Jazz Pharmaceuticals): Jazz Pharmaceuticals is a specialty biopharmaceutical company that engages the identification, development, and commercialization of pharmaceutical products for various medical needs worldwide. By today s close JAZZ dropped to the middle Keltner Channel which gives us a good entry point into this stock. We can take advantage of future price gains and give ourselves downside protection by initiating a call option spread. 2

3 We should consider initiating a call option spread on JAZZ for the March 22 nd expiration. At current prices the 145/160-strike spread has a 31% or $355 profit potential. If JAZZ increases in price, stays flat, or decreases -2.5% by expiration we will profit 31%. The next profit opportunity we'll look at is OTEX (Open Text Corp): Open Text Corp. designs, develops, markets, and sells enterprise information management software and solutions for businesses worldwide. The company has a history of strong financials including consistent revenue, equity, and retained earnings growth. We are currently offered a good entry point into this stock after its drop to the middle Keltner Channel recently. 3

4 We should consider purchasing a Market Neutral Spread on this stock to create a limited risk/unlimited profit potential trade. At current prices the OTEX March 22 nd 42.5/50-strike Market Neutral spread has a maximum risk of -15% and has unlimited profit potential: Buy to Open OTEX March 22 nd 42.5-strike Call Buy to Open OTEX March 22 nd 50-strike Put 4

5 The next profit opportunity we ll look at is AMZN (Amazon.com): Amazon is one of the world s largest online retailers. This company has excellent financials including consistent growth in revenue, equity, and retained earnings. The stock is in a 50/100-Day EMA uptrend that is confirmed by the presence of an up-sloping On Balance Volume. After dropping below the lower Keltner Channel, AMZN is oversold and we are currently presented with a favorable entry point. We should consider purchasing a weekly mini call option on AMZN for the March 7 th expiration. 5

6 The last profit opportunity we ll look at this week is CALD (Callidus Software): Callidus Software offers cloud-based solutions to companies worldwide. As you can see from the chart, CALD has performed well over the past several months. The stock recently retraced to the lower Keltner Channel and is on its way back up, closing near the middle Keltner Channel today. This positioning offers us a good entry point for a call option purchase. Since CALD does not offer weekly options, we should consider purchasing a March 22 nd call option on this stock. Note: Profit performance displayed in this newsletter does not include transaction costs. 6

7 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, please call Brad at or Cash Cow Newsletter Archive Click on the link provided below to access the Cash Cow Archive. Cash Cow Newsletter Archive: 7