Trade Alert: Set Stop on Tyson

Our January $55 call options on Tyson Foods (NYSE: TSN) are down a slight 8% at the moment. However, since our research shows this earnings-based uptrend peters out toward the end of the month, I want us to take some precautions.

So today, let’s place a stop-loss order that will execute at a 40% loss. We usually look to set a stop-loss at 75%. But I see no reason to set it so far down with this position. We’re close to the end of this trade, and if it tails off toward the end instead of handing us a profit, I’d rather preserve a larger sum of capital. Still, we’re giving ourselves room to profit if Tyson sees its typical rally.

Be sure to set your stop-loss order at whatever price equals a 40% loss based on your individual entry price. Our official entry price is $4.18, so our official 40% stop-loss order will be $2.50 in the portfolio.

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: Sell to Close
Order Type: Stop-Loss Order
Duration: GTC (Good ‘Til Canceled)
Limit Price: $2.50
Trade Deadline: Keep this order open until it is filled or canceled.

That’s all for this week unless anything happens in our portfolio that triggers an alert. As I mentioned last week, we’re entering a quieter period. I have four companies on the watch list for December, and then things will heat up again at the end of January.

In the meantime, this will be a great opportunity to answer any questions you may have about the trading system, the backtest results or anything else. Please drop me a note at earningsdrift@sovereignsociety.com if you have any questions you’d like to ask me.

I’ll answer a number of them for you in an upcoming mailbag issue.

Again, I’d like to thank you for participating in this beta test. All of your feedback continues to help me perfect this service. I’m excited about eventually launching it in full and taking advantage of all the opportunities upcoming earnings seasons will give us. I’ll make sure to keep you updated on the date of the full launch and when we’ll have the text-message alert service available.

Until next time, good trading…

Jeff Opdyke
Editor, Earnings Drift Alert