Trade Alert: Protect Capital in Monster

After the closing bell yesterday, Monster Beverage (Nasdaq: MNST) reported earnings that topped analysts’ expectations.

In return, investors pushed the shares up more than 3% today.

While this wasn’t enough to trigger a new trade on the stock, it did help our existing position, which is now at about a 10% loss. Remember, we were down nearly 40% at one point, so this is a significant swing.

With that in mind, we’re going to place a stop to preserve capital in case our calls drop to a 20% loss.

I want to see if the stock can continue higher in the next few days — and possibly get us out at a small gain. Even if we exit today for a 20% loss, that’s far better than the nearly 40% loss we were sitting on, so I’ll take it.

For now, let’s get our stop in place to preserve capital in case the stock pulls back.

Here’s your action to take:

Please note, based on our entry price of $3.38, we are going to place our 20% stop-loss order at $2.70. But be sure to set yours at whatever would be a 20% loss for you based on your entry price.

Action to Take
Sell Action to Take
Stock: Monster Beverage Corporation (MNST)
Option Type: Call Option
Expiration: Jun-16-2017
Strike Price: $45
Option Symbol: MNST170616C00045000
Action: Sell to Close
Order Type: Stop-Loss Order
Duration: GTC (Good ‘Til Canceled)
Limit Price: $2.70
Trade Deadline: Keep this order open until it is filled or canceled.

That’s all for today.

I continue to monitor our open positions and any new buying opportunities on a daily basis, but there isn’t much to update you on right now — so there’ss no action to take just yet.

Lam Research (Nasdaq: LAM) is holding up nicely, up nearly 200% today. Our stops to protect a 175% gain on the second half of this trade are still in place. Meanwhile, our June $105 call options on Edwards Lifesciences (NYSE: EW) are up more than 20%, and our Western Digital (Nasdaq: WDC) and Caterpillar (NYSE: CAT) call options are still underwater.

We have had several companies on our watch list report earnings that exceeded expectations, but the stocks’ price movements have failed to meet our parameters for trading. We still have a handful of companies set to report in the next week, though, so any day could have a trade for us. Keep paying attention to your inbox for our next opportunity.


Chad Shoop, CMT
Editor, Earnings Drift Alert