Tuesday, April 17, 2012

Trade Ideas: JOY May 12 Credit Put Spreads

Been keeping an eye on Joy Global (JOY) since Mark_Lexus entered the trade here.  Hasn't quite turned out the way he wanted but he was able to roll it down and out to May.  One of the few stocks I watch that isn't reporting earnings prior to May opex.  Looking at a couple different ideas here.  Keep in mind the highest put OI for May is currently at 70, so ideally I'd like to keep the short strike below that.

#1  Considering selling some put spreads if the stock pops last week's highs of around 77.25.  At that point I may go to 72.5/70 or 70/65 depending on the market conditions at the time, and the premium I would receive.  There is also a lot of price/volume resistance above 73 (even if about 60% of it is on the sell side).

#2  Is if the stock pulls back to the 20-day sma (the dotted green Bollinger band centerline).  At this point I'll look at 65/60 or 60/65 if there is enough premium.


#3  Is to use the rising long-term trendline on the weekly chart for support.  In this case I'll most likely look to enter 70/65 spreads.


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