Top Trade Ideas For The Week Of May 11, 2015: Bonus Idea
Dragonfly Capital | May 11, 2015 07:35AM ET
Here is your Bonus Idea with links to the full Top Ten:
Citigroup (NYSE:C), has been a serious laggard in the financial space since the market recovery began in 2009. Where many financials have recovered and are trading at new all-time highs, Citigroup has recovered less than 10% of the move lower. This leaves the stock technically poised for a possibly large long term move. But only if it can get through resistance. That has been the story since 2009.
In the short term the stock has some good prospects. It is back at that resistance again, the range from 54 to 55. This time it is from a series of higher lows after a pullback in January. The price action has formed an ascending triangle that targets a 6.50 move on a break out, or to 61 if to the upside.
It has positive support from the momentum indicators with the RSI in the bullish zone and rising, and the MACD about to cross up out of a flat move the past month. And the timing may be right with the Bollinger Bands® getting tight, often a precursor to a move in the stock price. The company is not expected to report earnings next until July 13th before the market opens. Short interest is low at 1.1%.
The options action for this week shows the biggest open interest at the 52.50 Strike and then the Calls seeing good open interest higher at 55 and 60. The Put side shows 50 and 51 below with large open interest as well. Looking out in the June Expiry there is open interest building at the 57.5 Call Strike with the 55 and 60 Strikes on the Call side also larger than anything on the Put side.
Citigroup Inc (NYSE:C)
Trade Idea 1: Buy the Stock on a move over 54.50 with a stop at 53.
A straight trade in the stock.
Trade Idea 2: Buy the June 55 Calls (offered at 88 cents late Friday).
Using defined risk to participate in a stock price move.
Trade Idea 3: Buy the May/June 55 Call Calendar (72 cents).
Lowers cost for participation looking for short term resistance at 55 to stop the stock.
Trade Idea 4: Buy the May/June 55 Call Calendar and sell the June 50 Puts (49 cents).
Adds leverage to the prior trade and risk under a price of 50.
Trade Idea 5: Buy the June/January 55 Call Calendar ($2.47) and sell the June/January Put Calendar (($1.84 credit) for 63 cents total.
Takes the whole trade structure longer and adds short term downside protection.
Get The News You Want
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 Market Macro picture reviewed Friday which, heading into the May Options Expiration week the equity markets look to have weathered a storm, or at least most of one.
Elsewhere look for gold to continue to move sideways near 1200 while crude oil pulls back in its new uptrend. The US Dollar Index still looks weak while US Treasuries remain biased lower. The Shanghai Composite looks to continue to pullback in its uptrend and Emerging Markets are biased to the downside.
Volatility looks to remain subdued keeping the bias higher for the equity index ETF’s ARCA:SPY, ARCA:IWM and NASDAQ:QQQ, despite the ruckus this week. Their charts all continue to look better on the longer timeframe with the SPY and QQQ looking more sideways in the short run while the IWM may take another leg lower. Use this information as you prepare for the coming week and trad’em well.
DISCLAIMER: The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.