EOT Trade Alert – June 11, 2015

Trade Alert:

Buy TAN July 17th 2015 $45.00 calls at $0.90 or better

 

Company Background:

Guggenheim Solar ETF (TAN) is an exchange traded fund that tracks an index of solar stocks.

 

Short-Term Catalyst:

There are several bullish long-term catalysts for the solar industry.

Things like global warming are the policy response by governments around the world to driving long-term growth in the demand for solar power.  What’s more, the technology is become more efficient and cost effective all the time.

However, the industry is still young and has endured the growing pains associated with a disruptive breakthrough technology.  As a result, there’s significant company risk when investing in solar stocks.

But even as individual companies and stocks have faltered, the overall sector has continued to move higher.  It’s for this reason I’m choosing to go with an ETF, not an individual stock for this trade.

Right now, TAN is bouncing off the 200-day moving average.  This is the first retest of this critical technical support level since it broke out above it in February.

This is the type of setup that can send the momentum prone TAN moving higher in a hurry.  In other words, this is a great entry point to buy call options on this ETF.

Let’s buy call options on TAN now to profit from the next bullish wave of momentum.

 

Trade Details:

Underlying Stock Symbol:	TAN
Current Bid-Ask Price:	$0.50- $0.85
Option “Buy Up To” Price:	$0.90
Break-Even On Stock At Expiration:	$45.90
Maximum Risk Per Contract:	$90.00

 

Exit Strategy:

TAN is trading at $42.31 per share.  Resistance levels will be at $46.00 and again at $49.00.  Remember, we want this stock to move higher.  Support levels will be at $38.00 and $34.00. Conservative investors should look to exit at the first support or resistance level. Aggressive investors may want to hold for a bigger move.

Chart:

 

Category: EOT Trade Alert