Citrix Systems - CTXS - close: 59.66 change: -0.62

Stop Loss: 61.15
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 1.9 million
Entry on December -- at $---.--
Listed on December 16, 2014
Time Frame: 8 to 12 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
The company press release describes CTXS as "a leader in mobile workspaces, providing virtualization, mobility management, networking and cloud services to enable new ways to work better. Citrix solutions power business mobility through secure, personal workspaces that provide people with instant access to apps, desktops, data and communications on any device, over any network and cloud. This year Citrix is celebrating 25 years of innovation, making IT simpler and people more productive. With annual revenue in 2013 of $2.9 billion, Citrix solutions are in use at more than 330,000 organizations and by over 100 million users globally."

It sounds like they are in the right industry. Cloud services, cloud networking, mobile apps and desktops. Those are all hot areas for business investment. Unfortunately the company might be encountering tough competition.

The company's Q2 earnings report back in July beat Wall Street's estimates on both the top and bottom line but management guided lower for Q3. When CTXS reported their Q3 results on October 22nd (after the close) their bottom line profit beat estimates by two cents. Yet their revenue number missed Wall Street's estimate. Once again management issued a bearish outlook. They guided earnings and revenues below Wall Street estimates. You can see how shares gapped down on October 23rd.

The stock bounced from these late October lows likely thanks to the market's super sharp rally. The stock market's big cap indices broke out to new highs but not so for CTXS. Shares failed at resistance and have been struggling for weeks.

Since their October report the stock has been downgraded and initiated with an underweight rating by two firms. The stock also got a big vote of no confidence when the latest 13F filings came out and it was revealed that some big fund managers have closed their positions in CTXS.

The stock's performance has created a bearish sell signal on the point & figure chart with a $49.00 target. This week CTXS has broken key support at the $60.00 level. Tonight I am suggesting a trigger to buy puts at $59.45.

I'm listing the March puts but we will plan exit prior to CTXS's earnings in late January (February puts are not available yet).

Trigger @ $59.45

- Suggested Positions -

Buy the MAR $57.50 PUT (CTXS150320P57.50) current ask $2.60

Option Format: symbol-year-month-day-call-strike

Daily Chart:

Weekly Chart: