Top Trade Ideas for the Week January 12, 2015: Bonus Idea

• Posted by Greg Harmon
• on January 12th, 2015

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

Hewlett-Packard, Ticker: $HPQ

Hewlett-Packard, $HPQ, has been moving higher off of the October bottom, now sitting at a 3 and a half year high. The broader trend is strong and the short term shows some trading opportunities. There is a small Measured Move higher to 43 and a slightly broader one to 45.25 above that. The RSI is strong and bullish supporting a move higher while the MACD is level and possibly turning higher to join it. There is resistance higher at 41 and 43 followed by 48.60. Support lower comes at 39.20 and 37.25 followed by 36. Open interest this week shows 39 and 40 on the Call Side as very large and lower at 36 on the Put side. The 39 to 40 area is large in February as well. Short interest is low at 1%. The company is expected to report earnings next February 19th, after the close, one day before the February options expire.

Trade Idea 1: Buy the stock on a move over 40.75 with a stop at 39.
A straight buy for a long run hold.

Trade Idea 2: Buy the January 40.5/40 1×2 Put Spread (offered at a 6 cent credit late Friday).
Looking for a pin at 40 this week and a possible entry to the stock with a basis at 39.50.

Trade Idea 3: Buy the January/February 41 Call Calendar (74 cents).
A trade for the upside over a slightly longer period and using the large January open interest as a possible break in the short run.

Trade Idea 4: Buy the February 39/41 bullish Risk Reversal (49 cents).
Looking for continued upside and protection at the large open interest at 39 on the put side in February.

Trade Idea 5: Buy the February 39/41/43 Call Spread Risk Reversal (13 cents).
Looking for continued upside and protection at the large open interest at 39 on the put side in February like #4 but with added leverage from selling the upside Call as well.

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 January Options Expiration week sees the equity markets looking at best to be consolidating. Elsewhere look for Gold to bounce higher in the possible bottoming while Crude Oil continues lower. The US Dollar Index looks ready to pause or pullback in its uptrend while US Treasuries are biased higher. The Shanghai Composite also may be ready for a pause or short term pullback in the uptrend while and Emerging Markets are consolidating and biased to the downside. Volatility looks to remain subdued but perhaps slightly drifting up, keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ, but less so marginally. Their charts suggest some consolidation is in order and perhaps a short term pullback. 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 December 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