While I wish all trades could be as easy as the ZUMZ trade – which returned a quick 152% gain – that’s not always the case. We may have had some great success stories over the years, but recently losses take their toll, too. I’m not concerned, though.
I’m finding a great deal of potential movers in the market, despite recent sell-offs on Greek worries, fears of a Fed hike, a government shutdown… even news that Donald Trump is running for office (I kid… he’s a good guy).
In Forgotten Profits, we still hold the AXP July 80 call, the ERIC July 11 call, the PG July 80 call, the MCD August 97.50 call, and the COH January 36 call after closing the ZUMZ trade for 152% in 14 days.
As for new trades, consider Micron (MU).
The stock took a massive beating, acting like a biotech stock with no revenue stream. I’m betting on a near-term dead cat bounce from an oversold situation. RSI sits at a ridiculous 13.4. MACD and Money Flow are both on the floor, too.
While I’m willing to bet on quick near-term reversal, we need to trade this smart.
To do so, I’m recommending a hedged bet with one put option picked up for every two calls purchased. If interested, consider buying to open the MU August 20 call up to $1 and, or the October 20 call up to $1.70. Hedge with the MU October 20 put up to $1.90.
This should be a quick, fun trade… I’m hoping for a repeat of the ZUMZ return.
Good Investing,
Ian L. Cooper
Forgotten Profits