Editors Note:

This recent position merits a rerun after an unexpected dip. I said last week I was going to add ITW back into the portfolio after we were stopped out on a temporary dip.


NEW DIRECTIONAL CALL PLAYS

ITW - Illinois Tool Works - Company Profile

Illinois Tool Works Inc. manufactures and sells industrial products and equipment worldwide. It operates through seven segments: Automotive OEM; Test & Measurement and Electronics; Food Equipment; Polymers & Fluids; Welding; Construction Products; and Specialty Products. The company distributes its products directly to industrial manufacturers, as well as through independent distributors. Illinois Tool Works Inc. was founded in 1912.

In late July, ITW reported earnings of $1.46 that rose 12.3% and beat estimates for $1.40. Revenue of $3.43 billion beat estimates for $3.40 billion. ITW guided for Q3 earnings of $1.42-$1.52 compared to analyst estimates for $1.46. The company raised full year guidance for earnings by 10 cents to the $5.50-$5.70 range. Analysts were expecting $5.51 per share.

Earnings Oct 19th.

The stock jumped from $111 to $115 on the news and then traded sideways for two weeks on post earnings consolidation. In early August, the shares started a slow climb to hit $119 and a new high. Every day I thought about recommending ITW but I kept waiting for a pullback.

After we were in the prior position the stock continued sideways with only a slightly positive bias. This consolidation was fin but we were stopped out on 9/1 when I raised the stop to close thinking the market was about to weaken.

On Friday shares spiked to $123.50 on no news. That spike was erased and shares drifted back down to the prior consolidation range of $119. If the market is going to rally, ITW is a strong growth stock that managers should want to own.

I am choosing an inexpensive strike to allow us to ride out any volatility.

Buy Dec $125 call, currently $2.00. No stop loss.


NEW DIRECTIONAL PUT PLAYS

No New Bearish Plays