NEW DIRECTIONAL PUT PLAYS
Garmin Ltd. - GRMN - close: 46.75 chane: -1.52
Stop Loss: 49.25
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below
Why We Like It:
GRMN is in the technology sector. They design and manufacture GPS systems.
The company just reported earnings on October 30th, before the opening bell. Wall Street was expecting a profit of 59 cents on revenues of $628 million. GRMN beat estimates with a profit of 69 cents with revenues at $643 million. Management went on to raise their 2013 guidance. By all accounts this looked like a bullish report so why are investors selling the news?
GRMN reacted to its earnings news with a spike above resistance near $50.00, which immediately reversed. Today the selling continued with another sell-off this morning and a breakdown below support. I suspect that after a nine-week, non-stop rally higher GRMN is just due for some profit taking.
I do consider this an aggressive trade. GRMN has obviously been volatile the last couple of days. Plus the most recent data listed short interest at 13% of the 121 million share float.
I am suggesting small bearish put positions now at the opening bell tomorrow. More nimble traders may want to wait and see if GRMN bounced toward $48 and then launch positions there instead. We'll start this trade with a stop at $49.25. Our target is $43.50. At this point GRMN should be nearing significant support in the $43.00 area and we might switch directions and buy calls.
- Suggested Positions -
Buy the DEC $45 PUT (GRMN1322X45) current ask $1.12
Entry on November -- at $---.--
Average Daily Volume = 1.2 million
Listed on October 31, 2013