Today, we’re locking in greater profits in our Lam Research (Nasdaq: LRCX) calls.
We own the June 16, 2017 $135 call options, and we already sold half for 50% after just three business days. Now our position is up more than 150%, so it’s time to increase our stop-loss order again.
It is currently placed at a 100% stop, but let’s notch that up to 115%. I don’t want to increase it more than that right now because the spread is so wide, but as the option continues to climb, I’ll look to increase it again.
For now, go ahead and modify your order to protect a 115% gain on the second half of this trade.
Based on our entry price of $5.25, I’ll place the stop at $11.25. But be sure to place yours at whatever nets you a 115% gain based on your individual entry price.
Here’s your action to take:
|Action to Take|
|Sell Action to Take|
|Stock:||Lam Research Corporation (LRCX)|
|Option Type:||Call Option|
|Action:||Sell to Close|
|Order Type:||Stop-Loss Order|
|Duration:||GTC (Good ‘Til Canceled)|
|Trade Deadline:||Keep this order open until it is filled or canceled.|
Before I sign off, a quick update on our latest trade…
On Friday, I sent you an alert to grab the June 16, 2017 $90 call options on Western Digital (Nasdaq: WDC) to benefit from its earnings drift. Those orders have been filled, and our official entry price is $3.22.
The stock is volatile today, down over 2%, so our options are underwater at the moment. But the prime holding period typically lasts a month, so we will give it some time to snap back.
Remember, this trading scenario came up in our backtesting six times, and only one time did it deliver a loss. The other five times, it saw gains of 3.5%, 7.5%, 7.8%, 9% and 13%. And those types of gains could be magnified greatly with our calls.
That’s all for today. Pay attention to your inbox this week, though; there are several possible trades that could be triggered each day, so it could be busy for us.
In the meantime, let’s lock in our 115% gain in Lam Research.
Chad Shoop, CMT
Editor, Earnings Drift Alert