Trade Alert: Three New Buys and a 50% Gain

Two weeks ago, my system triggered a new trade in Activision Blizzard (Nasdaq: ATVI). And today is the ideal time to jump on this earnings drift.

To top it off, between yesterday’s close and today’s open, two more trades were triggered — NetApp (Nasdaq: NTAP) and Best Buy (NYSE: BBY). And our backtests tell us these trades deliver the best returns when we jump in immediately.

So today is another busy one for us — I have three new buys for you. We’re also locking in a bigger gain in NVIDIA Corporation (Nasdaq: NVDA). With that in mind, let’s jump right into the trades, and then I’ll update you on the portfolio.

To start, our NVIDIA calls are up almost 100% in less than a week, and we want to ensure some of that profit. So we’re going to bump up our protective stop-loss order so that we’ll pocket at least a 50% gain on our remaining position. (Remember, we made a 50% gain on the first half of this trade yesterday.)

Keep in mind that the trade directions below are based on our official entry price of $6.10. Be sure to place your stop-loss order at whatever price nets you a 50% gain based on your individual entry price.

Here’s your action to take:

Action to Take
Sell Action to Take
Stock: NVIDIA Corporation (NVDA)
Option Type: Call Option
Expiration: Jan-20-2017
Strike Price: $85
Option Symbol: NVDA170120C00085000
Action: Sell to Close
Order Type: Stop-Loss Order
Duration: GTC (Good ‘Til Canceled)
Limit Price: $9.15
Trade Deadline: Keep this order open until it is filled or canceled.

Now for our new buys…

Buy the Blizzard Uptrend

Activision Blizzard, the gaming and entertainment company, posted results two weeks ago that blew past analyst expectations. However, the stock dropped almost 5.5% on the open.

This might seem like a deal-breaker for those looking to buy call options now — but our backtests show quite the opposite. Our historical research demonstrates that this knee-jerk selling usually reverses in two weeks. Now that we’re at that two-week mark, we want to get in before that rally occurs. It should happen any day now.

So today, we’re going to buy Activision’s January call options — our data shows higher returns come within a two-month holding period.

Here’s your action to take:

Action to Take
Buy Action to Take
Stock: Activision Blizzard (ATVI)
Option Type: Call Option
Expiration: Jan-20-2017
Strike Price: $40
Option Symbol: ATVI170120C00040000
Action: Buy to Open
Order Type: Limit Order
Duration: GTC (Good ‘Til Canceled)
Limit Price: $2
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 $2.
Once this order is filled, place the following order:
Sell Action to Take
Stock: Activision Blizzard (ATVI)
Option Type: Call Option
Expiration: Jan-20-2017
Strike Price: $40
Option Symbol: ATVI170120C00040000
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.

Buy Calls on NetApp

After yesterday’s close, storage and data-management company NetApp posted earnings that were 11% better than Wall Street’s expectations. In turn, shares popped 10% before the market opened today.

Based on my research, this specific stock drift has generated returns between 9% and 17% within two months. And since we use options, we can expect significantly larger returns than that.

So we will buy the January call options to capture the coming uptrend.

Here’s your action to take:

Action to Take
Buy Action to Take
Stock: NetApp (NTAP)
Option Type: Call Option
Expiration: Jan-20-2017
Strike Price: $37
Option Symbol: NTAP170120C00037000
Action: Buy to Open
Order Type: Limit Order
Duration: GTC (Good ‘Til Canceled)
Limit Price: $2
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 $2.
Once this order is filled, place the following order:
Sell Action to Take
Stock: NetApp (NTAP)
Option Type: Call Option
Expiration: Jan-20-2017
Strike Price: $37
Option Symbol: NTAP170120C00037000
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.

A Good Bet on Best Buy

This morning, electronic retailer Best Buy announced earnings that were more than 30% higher than analysts’ forecasts. Investors were euphoric, so shares jumped 7% at the open today. And with that, our parameters for making this trade were surpassed.

This drift for Best Buy has appeared more than 10 times since 2005 (a high rate), and it generates an average return of 14% — which could easily hand us a triple-digit gain in the options market.

The drift continues for about two months, so we’ll grab the January call options here as well.

Here’s your action to take:

Action to Take
Buy Action to Take
Stock: Best Buy (BBY)
Option Type: Call Option
Expiration: Jan-20-2017
Strike Price: $44.04
Option Symbol: BBY170120C00044040
Action: Buy to Open
Order Type: Limit Order
Duration: GTC (Good ‘Til Canceled)
Limit Price: $2.60
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 $2.60.
Once this order is filled, place the following order:
Sell Action to Take
Stock: Best Buy (BBY)
Option Type: Call Option
Expiration: Jan-20-2017
Strike Price: $44.04
Option Symbol: BBY170120C00044040
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.

Portfolio Update

Our new trade on Target Corp. (NYSE: TGT) is officially in the portfolio since it traded under my limit price of $2.80 yesterday. As you likely know by now, our official entry price is pulled from the average of the price right after the alert broadcasts and the price an hour later. So our official entry price is $1.93, meaning our limit order price to sell half the position for a 50% gain is set at $2.90. Make sure to set yours at whatever nets you a 50% gain based on your own entry price.

As always, I need your feedback when entering a trade so that I know how everything is going with the trading process. Please let me know how this one went for you by filling out the brief survey below.

I’ve been receiving great feedback from you all, and I want to thank each of you for keeping in touch about this service.

Until next time, good trading…

Jeff Opdyke
Editor, Earnings Drift Alert