Several possible trades to consider:
- PCLN, 50 day SMA is 500. PCLN has almost never fallen below 50 SMA, except during the flash crash. A spread of 495/500 carries a relatively low risk. Long 495 May 13 put, short 500 May 13 put, profit $.675 (15.6% return in one week).
- NFLX: 50 day SMA = 225.64. Current price: 229.47. Spread of 220/225: cost: 3.775, profit: 5 – 3.775 = 1.225 (1.225/3.775 = 32.5% return in one week). This trade is a bit riskier, with a higher return as well. In the last 2 years, NFLX has dropped below 50 day SMA only a few times and then quickly rose above this strong support. If you have guts, this is an interesting trade.
- FFIV ($100.9): this stock has been bearish since 1/11’s poor earnings report. The last earnings report was great and the stock price shot up from below 20 day SMA to at the 50 day SMA. But it failed to rise and stay above 50 day SMA. Now it’s stuck between 20 day and 50 day SMA (98.94 and 102.15). Although I don’t believe FFIV will be able to rise above 50 day SMA anytime soon, it’s unlikely to fall below the 20 day SMA easily either. Its May 13 put spread of 95/97.5 costs $2.1, profit $.4 (or 19%).
