Technical tools used:
- Moving Averages
- TrendlinesBrian Overby’s less speculative strategy based on Michael’s Analysis – Long Call Spread
Since Navistar appears to be stabilized and in a rounded bottom pattern from its recent lows, we will look at a neutral to bullish trade. Both its implied and historical volatilities are both just above 40% and it since they recently released earnings, this level could be interpreted as low expectation of any major news coming out in its near future.Possible Trade - Long Call Spread
- Sell 1 Feb 16th NAV 26 Call
- Buy 1 Feb 16th NAV 23 Call
- 39 days to expiration
- Net Bid .90, Ask 1.10, Mid 1.00
- Total net debit is 1.10 if we can get filled at the Ask.
- Maximum potential loss is $1.10
- Maximum potential gain is $1.90
- Total commission to enter this trade is $6.25Possible More Speculative Trade - Long Call
- Buy 1 Jan 19th NAV 21 Call
- 11 days to expiration
- Net Bid 2.05, Ask 2.15
- Total debit is 2.15 if we can get filled at the Ask.
- Maximum potential loss is $2.15
- Maximum potential gain is Unlimited if the stock goes to infinity. (Not going to happen)
- Total commission to enter this trade is $5.60
**NOTE: option prices are given as a per contract amount. Multiply loss and gain figures by 100 shares and by the number of contracts traded to determine the amount of the full potential loss or full potential gain. No additional calculations are needed to determine commission costs.
TradeKing Options Tools used:
- Detailed Quote
- TradeKing Long Call Spread
- TradeKing Long Call
- TradeKing Volatility Charts
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