Top Trade Ideas for the Week December 15, 2014: Bonus Idea

• Posted by Greg Harmon
• on December 15th, 2014

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

Visa, Ticker: $V

Visa, $V, had a fake out move lower out of a triangle in October before blasting higher. It consolidated in a bull flag before running up to a peak over 265, Friday it broke the uptrend with a move lower closing below the 20 day SMA. The RSI is working lower but still in the bullish zone while the MACD is falling, both supporting more downside price action. There is support at 252 and 248 followed by 243 and 235.50 before 228.50 and a gap to fill to 218.40. The lower Bollinger Band® is near at 247 and the 23.6% Fibonacci retracement comes at 249. Resistance higher may come at 259.50 and 265. Short interest is low at just over 3%.

Trade Idea 1: Sell the stock short on a move under 256 with a stop at 260.
A straight short bet on the stock risking $4 or 1.5%.

Trade Idea 2: Buy the December 255 Put (offered at $2.49 late Friday) on the same trigger.
A defined risk lower cost way to get short exposure to the stock this week.

Trade Idea 3: Buy the December 255/250 Put Spread ($1.48).
A defined risk lower cost way to get short exposure to the stock this week, but with a capped payout of $5 for a maximum 3.37:1 reward to risk ratio.

Trade Idea 4: Buy the December 255/250/245 Put Butterfly ($1.04).
A defined risk lower cost way to get short exposure to the stock this week, looking for 250 to act as a draw. At 250 it pays $5. It risks even less and has a maximum reward to risk payout almost 5:1.

Trade Idea 5: Sell the December 265/270 Call Spread (62 cent credit).
The maximum gain is the premium sold and it is profitable as long as the stock does not make a new high this week. Over 265 your maximum loss can be $4.38 at 270 or above.

Trade Idea 6: Buy the December 255/250/245 Put Butterfly and sell the December 265/270 Call Spread (42 cents).
This leverages Trade Idea 4 by adding Trade Idea 5. It raises the reward to risk ratio if the stock drops to a maximum of 11.9:1 but you lose the premium paid over 254.60 up to 265. Over 265 your maximum loss can be $5.42 at 270 or above.

Premium Content
The Best

The Rest Premium

Free Content
The Rest

If you like what you see sign up for more ideas and deeper analysis using the Get Premium button above.

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, heading into the last full week of the year sees the equity markets showing weakness. Elsewhere look for Gold to continue its short term uptrend while Crude Oil continues the trend lower, but with perhaps a short term bounce. The US Dollar Index looks to move sideways in the uptrend while US Treasuries are biased higher. The Shanghai Composite is finally consolidating its strong move in the uptrend while Emerging Markets look to continue their fall lower. Volatility looks to remain slightly elevated in the low zone keeping the short term bias lower for the equity index ETF’s SPY, IWM and QQQ. The SPY and QQQ look weakest and have room to pullback more while the IWM is consolidating but at the bottom of the range, so also vulnerable. Use this information as you prepare for the coming week and trad’em well.

Get my book, Trading Options: Using Technical Analysis to Design Winning Options Trades.

Want to learn more about Dragonfly Capital Views?
Dragonfly Capital Views Performance Through November 2014 Expiry and sign up here

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.

blog comments powered by Disqus