NEW DIRECTIONAL CALL PLAYS
F5 Networks Inc - FFIV - close: 79.33 change: +0.61
Stop Loss: 76.25
Target(s): 84.50, 89.00
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below
Why We Like It:
If the market continues to rally then technology will most likely lead the way higher. FFIV continues to do well and shares outperformed the major indices tonight. We are suggesting very small bullish positions now. Why small positions? We are still facing a lot of economic headlines this week and any of them could be a catalyst for more profit taking. Plus, FFIV is still trading just under round-number resistance at $80.00 and you could argue the stock is short-term overbought with its three-day bounce from $71.20.
The plan is to buy calls on FFIV now but only if the stock and the S&P 500 index both open positive tomorrow morning. Nimble traders may want to consider using a trigger above $80.00 (maybe $80.25 or $80.50) as an alternative entry point just in case the S&P500 opens lower but FFIV rallies.
This is an aggressive, higher-risk entry point. We'll start the trade with a stop loss at $76.25. Our targets are $84.50 and $89.00.
NOTE: Any big dip is going to crush the September calls since they expire in just over two weeks. Readers may want to play the Octobers instead.
buy calls if FFIV and the S&P 500 index open positive tomorrow morning.
- Suggested Positions -
buy the SEP $85 call (FFIV1117I85) current ask $1.68
- or -
buy the OCT $85 call (FFIV1122J85) current ask $4.35
Entry on August xx at $ xx.xx
Earnings Date 10/25/11 (unconfirmed)
Average Daily Volume = 3.5 million
Listed on August 30, 2011