Top 5 Trade Ideas: Week Of October 8, 2012
Dragonfly Capital | Oct 09, 2012 02:49AM ET
Chevron (CVX) is consolidating in a bull flag between 116 and 118.50. It has a bullish Relative Strength Index (RSI) and a Moving Average Convergence Divergence indicator (MACD) that is negative but improving. Both support a move higher. A break over the top of the flag carries a Measured Move to 124. Use a move over 118.50 as a long entry.
Trade Idea 1: Buy the stock on the trigger with a $2 trailing stop. Take off 1/3 at the target 124.
Trade Idea 2: Buy the October monthly 120 Calls (offered at 43 cents late Friday) as a pure speculative play.
Trade Idea 3: Sell the October monthly 110 Puts (11 cents) to offset the cost of trade 2 or as a possible long entry lower.
Trade Idea 4: Buy the November 120/125 Call Spread ($1.08) nearly a 5:1 reward to risk ratio.
Trade Idea 5: Sell the November 110 Puts (69 cents) for the premium or to offset the cost of trade 4.
After reviewing over 1,000 charts, I have found some good setups for the week. These were selected and should be viewed in the context of the broad Original post
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