NEW DIRECTIONAL CALL PLAYS
Acme Packet Inc. - APKT - close: 82.02 change: -1.71
Stop Loss: 74.45
Target(s): 89.00, 97.50
Current Option Gain/Loss: + 0.0%
Time Frame: 4 to 8 weeks
New Positions: Yes, see below
Why We Like It:
Before I begin this is an aggressive, higher-risk trade. Shares of APKT have been volatile in the last few days. Now that's understandable given the earnings report a couple of days ago. The earnings results were good and the company raised guidance. This news help launch APKT out of its two-month consolidation under the $75.00 level. Now broken resistance at $75.00 should be new support.
There are a lot of bulls applauding APKT and the company seems poised to benefit from the explosion of "cloud" computing. The stock is very expensive on a valuation basis but I suspect that momentum could eventually carry it toward the $100 level.
I am suggesting small bullish positions now. Our upside targets are $89.00 and $97.50. FYI: The Point & Figure chart for APKT is bullish with a $95 target.
- Suggested Positions - (SMALL POSITIONS)
Buy the May $85 call (APKT1121E85) current ask $2.75
- or -
Buy the June $85 call (APKT1118F85) current ask $4.90
Entry on April 29th at $ xx.xx
Earnings Date 04/26/11
Average Daily Volume = 2.5 million
Listed on April 28th, 2011