Today’s MRKT Call is Presented by Fidelity
Today at 1 pm, Guy Adami and Dan Nathan will go live on YouTube to discuss:
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Chart Check on the Markets
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Bullish Trade Idea: Utilities (XLU)
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Bearish Trade Idea: Caterpillar (CAT)
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SHOW NOTES:
Bullish Utilities (XLU) Trade
XLU ($63.88) Buy June 65/70 Call Spread for ~$1.50
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Buy to open 1 June 65 call for ~$1.85
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Sell to open 1 June 70 call at ~$0.35
Break-Even on June Expiration:
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Profits of up to $3.50 between $66.50 and $70 with a max gain above $70
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Losses of up to $1.50 between $65 and $66.50 with a max loss below $65
Trade Rationale & Management:
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This trade idea risks 2.5% of the ETF price and has a break-even up 4% with a max payout of 5.5% if the ETF is up ~10% in two and a half months
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As with all long premium directional trade ideas, we will cut the loss if the position is half the original premium paid
Bearish Caterpillar (CAT) Trade
CAT (~$357.50) Buy to Open 1 May 350 put for ~$11
Break-Even on May Expiration:
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Profits below $339
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Losses of up to $11 between $339 and $350 with max loss above
Trade Rationale and Management:
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This trade idea risks about 3% of the stock price and has a break-even down of ~5%
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The stock is up 21% in the year, doubling the performance of the SPX and up 66% in the last 12 months, compared to the SPX’s 31% gains
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If the stock starts to move towards the long put strike, I will look to speed up by selling a lower strike put, creating a put spread.
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May expiration will catch Q1 earnings the last week of April targeting the breakout level from late January
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As with all long premium directional trade ideas, we will cut the loss if the position is half the original premium paid
Boeing Trade Update
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