Pharma Trade

{+++}I have been watching Hi-Tek Pharmacal, $HITK, since the earnings trade we did a few weeks back. It has been improving and heading back to a profitable trade so I was considering to have the stock put to me. But today it gave me a profit and looks to be in a good uptrend. My friend @wallstreetbean has been telling me the fundamentals look good as well. Look at the chart below.

It is breaking higher out of a symmetrical triangle with a bullish and rising Relative Strength Index, and a Moving Average Convergence Divergence (MACD) indicator heading back to a positive cross. I like it long and bought the third idea below in half size for now.

Trade Idea 1: Buy the stock with a stop under 38.

If it breaks 42 consider selling the January 45 Calls against it.

Trade Idea 2: Buy the January 40 Calls for 1.90, stopping it at 1.00

If it breaks 42 consider selling the January 45 Calls against it to make a 40/45 Call Spread.

Trade Idea 3: January 40 Buy Write
Buy the stock and sell the January 40 Call against it, 1 call per 100 shares of stock. I did this trade for 37.87. Stop this trade by selling the stock on a move below that level. At January expiry you can get called away if it is over 40 for a 5.5% profit, or roll the calls forward. If it does not break 40 on Expiry you can sell the next strike to lower your cost basis further.

These trades are likely to be around Monday as well if you are skittish on a Friday afternoon.

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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