Trade Alert: A New Buy and Locking in Two Gains

This morning, a new trade was triggered!

But before we get to our new buy, we have a couple of positions moving our way that I want us to manage.

First off, this morning, our position in NVIDIA Corporation (Nasdaq: NVDA) surged to 61%, triggering our orders to sell half the position for a 50% gain in just three trading days. As part of our profit-managing strategy, we’re going to place a stop-loss order to secure at least 10% on the second half of the position.

If your orders to sell half your position at a 50% gain haven’t been filled for any reason, go ahead and sell half your position at the market. Then you can manage the remaining half with the 10% stop-loss.

Remember that the trade directions below are based on our official entry price of $6.10. So be sure to place your stop-loss order at whatever price nets you a 10% gain based on your individual entry price. For the portfolio, 10% would be roughly $6.75.

Here’s your action to take:

Action to Take
Sell Action to Take
Stock: NVIDIA Corporation (NVDA)
Option Type: Call Option
Expiration: Jan-20-2017
Strike Price: $85
Option Symbol: NVDA170120C00085000
Action: Sell to Close
Order Type: Stop-Loss Order
Duration: GTC (Good ‘Til Canceled)
Limit Price: $6.75
Trade Deadline: Keep this order open until it is filled or canceled.

Lock in 75% in Garmin

Now on to our next position…

Today, we’re also going to lock in a 75% profit in Garmin (Nasdaq: GRMN). Yesterday, we ensured a 50% gain in these call options — and now they’ve climbed into the triple digits. We’re up by about 102%!

So I want us to move our protective stop-loss orders higher to safeguard our profits.

Keep in mind that the trade directions below are based on our official entry price of $2.70. Be sure to place your stop-loss order at whatever price nets you a 75% gain based on your individual entry price.

Here’s your action to take:

Action to Take
Sell Action to Take
Stock: Garmin Ltd. (GRMN)
Option Type: Call Option
Expiration: Jan-20-2017
Strike Price: $47.50
Option Symbol: GRMN170120C00047500
Action: Stop-Loss Order
Order Type: GTC (Good ‘Til Canceled)
Limit Price: $4.75
Trade Deadline: Keep this order open until it is filled or canceled.

As always, we may adjust our protective stops higher as this earnings trend continues going our way, so keep an eye on your inbox.

Now for our new profit opportunity…

Buy Calls on Target

Target Corp. (NYSE: TGT), the large discount retailer, reported earnings that handily surpassed analysts’ expectations, sending its shares up 7%.

Based on our research into how Target’s shares react to earnings, we know we should buy calls today and hold them for about two months. In our backtest, this scenario delivered the strongest performance — the stock climbed between 4.5% and 13% during this period when our parameters were hit.

By using the options market — we can magnify those gains.

So let’s take advantage of this earnings drift by purchasing the January call options today.

Action to Take
Buy Action to Take
Stock: Target Corp. (TGT)
Option Type: Call Option
Expiration: Jan-20-2017
Strike Price: $77.50
Option Symbol: TGT170120C00077500
Action: Buy to Open
Order Type: Limit Order
Duration: GTC (Good ‘Til Canceled)
Limit Price: $2.50
Trade Deadline: If your order is not filled by my next update, I will update you on the trade.
Note: Do not place a market order. Set the limit order at $2.50.
Once this order is filled, place the following order:
Sell Action to Take
Stock: Target Corp. (TGT)
Option Type: Call Option
Expiration: Jan-20-2017
Strike Price: $77.50
Option Symbol: TGT170120C00077500
Action: Sell to Close Half
Order Type: Limit Order
Duration: GTC (Good ‘Til Canceled)
Limit Price: Whatever nets you a 50% gain.
Trade Deadline: Keep this order open until it is filled or canceled.
Note: This second order will allow us to collect a 50% gain on half of our position in the event that a quick move happens before I can get a trade alert out to you.

As a quick note, I know things have been a bit busy recently, but this system is working great for us. We’ve closed a string of excellent returns, including gains of 51%, 50%, 101%, 51%, 50%, 51%, 299% and 51% (in half positions), and we hold two open positions that are north of 100%. Since we opened this beta test, we’ve had one loss of 76% among those winners.

Now we’re nearing the end of this earnings season, and then we’ll have a bit of a quiet period for about a month or so. That’s the nature of this service — periods of back-to-back quick gains, followed by a respite as we gear up for the next earnings season.

In the meantime, we still have seven possible trades left in this earnings season, which should all be announced by the end of November.

In fact, watch out for an alert tomorrow. Our trade in Activision Blizzard Inc. (Nasdaq: ATVI), the gaming and entertainment company, will be ready. Early this month, the company released earnings that triggered a trade — but our backtest showed the best profits were found if we entered this position a couple weeks later. Tomorrow will be the perfect opportunity.

Until next time, good trading…

Jeff Opdyke
Editor, Earnings Drift Alert