4 Trade Ideas for Yum Brands: Bonus Idea

Here is your Bonus Idea with links to the full Top Ten:

Yum Brands, $YUM, started higher off of a bottom in March. It continued in an Impulse Wave higher to a top at the 200 day SMA in June. After a Corrective Wave lower, it found support at a higher low later in the month. It has consolidated in an ascending triangle since. Friday it broke to the upside, giving a target to at least 111. It is a few days away from printing a Golden Cross and has the RSI rising in the bullish zone. The MACD is crossed up and lifting as price rides the Bollinger Bands® as the open higher.

There is resistance at 97.75 and 101.50 then 105.25 and 107.50. Support lower comes at 95.15 and 92.50 then 90.50 and 88.50 before 85.50. Short interest is low at 1.2%. The stock pays a dividend with an annual yield of 1.96% and begins trading ex-dividend on Tuesday. The company is expected to report earnings next on October 28th.

Options expiring this week have the largest open interest at the 93 put strike and then from 95 to 96 on the call side. For September, the 90 put has the biggest open interest with the call side smaller and focused at 95. In the October chain 90 is still the biggest open interest on the put side with it spread from 95 to 105 on the call side. The November options are the first to cover the next earnings report. They show open interest spread from 80 to 90 on the put side and from 95 to 110 on the call side.

Yum Brands, Ticker: $YUM

Trade Idea 1: Buy the stock on a move over 97 with a stop at 94.50.

Trade Idea 2: Buy the stock on a move over 97 and add a September 95/90 Put Spread ($1.65) while selling the September 100 Calls (60 cents).

Trade Idea 3: Buy the September/November 100 Call Calendar ($3.10) and sell the October 90 Put ($1.55).

Trade Idea 4: Buy November 100/110 Call Spread ($2.30) and sell the November 90 Puts ($2.30).

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After reviewing over 1,000 charts, I have found some good setups for the week.  These were selected and should be viewed in the context of the broad Market Macro picture reviewed Friday which with the August options expiration in the past, sees equity markets showed some divergence, with the small caps moving lower while the S&P 500 and Nasdaq 100 set all-time highs.

Elsewhere look for Gold to continue to consolidate in the uptrend while Crude Oil slowly drifts higher in consolidation. The US Dollar Index pauses in consolidation while US Treasuries consolidate in their uptrend. The Shanghai Composite looks to consolidate over support while Emerging Markets consolidate in their uptrend.

The Volatility Index looks to continue the slow drift lower making the path easier for equity markets to the upside. Their charts are mixed though, with the SPY and QQQ looking strong on both timeframe. The IWM is building a bull flag on the shorter timeframe and showing a reversal on the longer chart. Use this information as you prepare for the coming week and trad’em well.

If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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