NEW DIRECTIONAL PUT PLAYS
Green Mountain Coffee Roasters - GMCR - close: 72.01 change: -1.18
Stop Loss: 76.01
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below
Why We Like It:
GMCR is a popular momentum play for traders both long and short. The stock made headlines yesterday as Wall Street speculated if GMCR was about to launch a new product that would compete with SodaStream (SODA). It looks like yesterday's rally may have been a one-day pop and a knee-jerk reaction by the shorts. There are a lot of shorts in GMCR. The most recent data listed short interest at 34% of the 129.3 million share float. That's going to keep GMCR shares volatile with the tug of war between bears and the bulls.
It does look like the trend is favoring the bears. GMCR peaked in May. It produced a bull-trap pattern with the higher high in mid June that quickly reversed lower. Now GMCR has been sinking the last few weeks while the broader market has been in rally mode. Today's rally pierced resistance at several moving averages, including the 50-dma, and it traded above round-number resistance at $75.00. Yet the rally today failed as GMRC reversed lower.
I am suggesting new bearish positions at the opening bell tomorrow. We will want to keep our position size small to limit our risk. Our short-term target is $65.50. More aggressive traders could aim for the $61-60 zone instead since $60 looks like stronger support.
FYI: The Point & Figure chart for GMCR is bearish with a $57 target.
- Suggested (Small) Positions -
buy the Aug $65 PUT (GMCR1317T65) current ask $3.75
Entry on July -- at $---.--
Average Daily Volume = 4.0 million
Listed on July 16, 2013