NEW DIRECTIONAL PUT PLAYS
WESCO Intl. - WCC - close: 78.26 change: -1.09
Stop Loss: 80.55
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 306 thousand
Entry on September -- at $---.--
Listed on September 30, 2014
Time Frame: 8 to 12 weeks
New Positions: Yes, see below
Why We Like It:
WCC is part of the services sector. They distribute industrial equipment. Their website describes WCC as "WESCO Distribution is a leader in industrial supply with an extensive offering of electrical, data communications, general maintenance, repair, and operating (MRO) and electrical OEM products. We are more than just an electrical distributor; we are a company of procurement specialists, helping customers lower supply chain costs, increase efficiency through WESCO Value Creation and save energy with green and sustainability initiatives. Our network of branches delivers industrial supply products fast, and our vast catalog of supplier partners enables WESCO to be your one-stop shop for electrical and MRO products."
Unfortunately for shareholders the stock peaked back in January this year. WCC produced a lower high in June. After a two-month drop WCC bounced but the bounce failed early September under resistance near $86.00, resistance at its simple 200-dma and resistance at the 50% retracement of the decline.
This trade isn't just about the technical picture. WCC has missed Wall Street's earnings estimates every quarter this year starting with its quarterly report announced in January, then April, and most recently in July. When WCC reported its July results management also lowered their 2014 guidance.
We are not the only ones who think WCC is bearish. The most recent data listed short interest at 13% of the 44.1 million share float. The point & figure chart is bearish too and forecasting at $64.00 target.
Today's drop was fueled by strong volume and shares are poised to break down under its late July low. Tonight we are suggesting a trigger to buy puts at $77.75.
Trigger @ $77.75
- Suggested Positions -
Buy the NOV $75 PUT (WCC141122P75) current ask $1.80
Option Format: symbol-year-month-day-call-strike