Trade Alert: Buy Calls on Juniper

Two more trades were triggered recently — one of which we trade today, the other we trade in two weeks.

Today’s trade is in Juniper Networks (NYSE: JNPR).

The communications equipment provider posted fourth-quarter earnings that topped analyst estimates by nearly 5% — yet the stock gapped lower this morning, opening down more than 8%.

Our historical data tells us that this diversion — a positive earnings beat and a gap lower — sends Juniper’s stock rallying in the following weeks. We saw this happen three times in the past, each resulting in returns of 5% to 14% — gains we can multiply in the options market.

To benefit from this coming rally, let’s grab the April 21 $27 call option.

Here’s your action to take:

Action to Take
Buy Action to Take
Stock: Juniper Networks Inc. (JNPR)
Option Type: Call Option
Expiration: Apr-21-2017
Strike Price: $27
Option Symbol: JNPR170421C00027000
Action: Buy to Open
Order Type: Limit Order
Duration: GTC (Good ‘Til Canceled)
Limit Price: $1.20
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 $1.20.
Once this order is filled, place the following order:
Sell Action to Take
Stock: Juniper Networks Inc. (JNPR)
Option Type: Call Option
Expiration: Apr-21-2017
Strike Price: $27
Option Symbol: JNPR170421C00027000
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.

Both the Western Digital (Nasdaq: WDC) calls and Mattel (Nasdaq: MAT) puts were filled — so we’re officially tracking them in the portfolio.

Our official entry price for the Western Digital March 3 $79 calls is $3.18, and for the Mattel February 24 puts, the entry is $1.40.

Remember, for our entry points, we take the average of the prices a minute after the alert broadcasts and one hour later. We want to better reflect the average entry point of everyone making these trades.

If your orders haven’t been filled yet, keep them open for another week or so, and see if they can get triggered.

I’ll continue to update you on these trades, and I’ll alert you if any action is needed.

That’s all for now. This is the fourth trade we’ve executed in a little over a week — so clearly earnings season is ramping up for us. And as I mentioned, another trade was triggered for us recently, which we’ll be entering within the next two weeks.

So keep an eye out for my alerts — we’re heading into our busy period.

Talk to you again next week.

Until next time, good trading…

Jeff Opdyke
Editor, Earnings Drift Alert