Trade Alert: Lock in 50% on Tyson

We’re locking in another double-digit gain today…

On Tuesday, our January $55 Tyson Foods (NYSE: TSN) calls were down 8%, so we placed a stop-loss order that would execute at a 40% loss. I wanted to protect us on the downside, while at the same time giving us room to profit since the uptrend still had time to play out.

Since Tuesday, that uptrend has kicked in — and our calls are now up about 70%. That’s a significant swing in a week, and I want us to capture some of those gains now.

So first, let’s cancel that 40% stop-loss order. Not all brokers will allow you to hold this stop open at the same time as the limit order I want us to place to capture our gains. In fact, that’s why our original standing limit order to collect 50% on half the trade was nullified. We couldn’t hold both at the same time.

Today, we’re basically re-establishing that limit order.

With that in mind, let’s place a limit order to sell half of the Tyson calls at whatever nets you at least a 50% gain based on your individual entry price. For our official position, that would be $6.30 since our entry price was $4.18.

I don’t want us placing a market order because there’s no way for me to tell what the option’s price will be by the time you see the alert. Some of you may not see it for hours, and option prices can swing wildly in that time. Utilizing a limit order, however, ensures that you are able to lock in at least a 50% gain.

So after you cancel your stop-loss order, here’s your new action to take:

Action to Take
Sell Action to Take
Stock: Tyson Foods Inc. (TSN)
Option Type: Call Option
Expiration: Jan-20-2017
Strike Price: $55
Option Symbol: TSN170120C00055000
Action: Sell to Close HALF
Order Type: Limit Order
Duration: GTC (Good ‘Til Canceled)
Limit Price: $6.30
Trade Deadline: Keep this order open until it is filled or canceled.

Since the option is up over 50%, this should execute quickly for you. Remember, we’re only selling half, since we could see the option rally even higher in the coming weeks before the trend peters out at the end of the month.

With that in mind, I have an action for us to take on the second half of this trade.

Note: Only make this trade after the top trade has triggered, handing you a 50% gain on the first half.

As part of our profit-managing strategy, we’re going to place a stop-loss order to secure at least a 10% gain on the second half of the position.

Remember that the trade directions below are based on our official entry price of $4.18. 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 $4.60.

Here’s your action to take:

Action to Take
Sell Action to Take
Stock: Tyson Foods Inc. (TSN)
Option Type: Call Option
Expiration: Jan-20-2017
Strike Price: $55
Option Symbol: TSN170120C00055000
Action: Stop-Loss Order
Duration: GTC (Good ‘Til Canceled)
Limit Price: $4.60
Trade Deadline: Keep this order open until it is filled or canceled.

That’s all for this week. Remember to send me any questions you might have about the service, the system or the trading process. I want you to be as comfortable trading this system as possible, so I’ll be sending out another mailbag issue shortly. You can always reach me at earningsdrift@sovereignsociety.com.

Until next time, good trading…

Jeff Opdyke
Editor, Earnings Drift Alert