Optioneering Newsletter Oct 24

Optioneering Newsletter
October 23, 2016
The Dow Monthly
The monthly trend is up and the long-term outlook is bullish. However,

there are always corrections along the way. The little pullback that has
occurred recently is expected to yield to a further advance.
The first profit opportunity we will review is in TQQQ, the ProShares
UltraPro QQQ. TQQQ seeks to yield results that correspond to three times
the daily performance of the QQQ.
TQQQ Monthly
TQQQ hit a new record high on October 10th. New record highs are bullish.
TQQQ Daily
The daily chart shows that QQQ was very bullish from the June low to the
early August high. Despite the recent record high, trading since the early
August high has been more sideways that bullish. Sideways trading in a
bull trend usually yields to a further advance.
TQQQ is a leveraged ETF. While leveraged ETFs contain more risk, they
usually possess higher premiums as a result. We suggest taking advantage
of the high premiums offered by initiating debit spreads.
Traders who want a more leveraged approach could consider buying

TQQQ calls. TQQQ has options expiring every week until December 2nd.
After that, TQQQ has options expiring in mid-December, January, March,
June, and January 2018.
Buy to Open TQQQ November 18th expiration 111-strike Call

Sell to Open TQQQ November 18th expiration 121-strike Call
We can see from the Call Option Spread Analysis Calculator that if the
TQQQ ETF price declines by -2.5%, stays where it is, or increases in price
when the options expire, the spread will make a 26.6%, or $210 profit. If
TQQQ declines by -5%, the spread will make 16.1% or $128. If the TQQQ
ETF price is down -7.5% when the options expire, the spread will lose
-23.9%, or -$189.
The next profit opportunity we will review is in BABA, or Alibaba Group

Holding Ltd. Alibaba Group Holding Limited is an Amazon type Chinese e-
commerce company that provides consumer-to-consumer, business-to-
consumer, and business-to-business sales services via web portals. It also
provides electronic payment services, a shopping search engine, and data-
centric cloud computing services. The group began in 1999 when Jack Ma
founded the website Alibaba.com. The Alibaba IPO (initial public offering) in
2014 was the largest IPO in history.
BABA Weekly
The weekly chart shows that BABA has been in an uptrend since this
year’s low. The next upside target is above the 2014 high.
BABA Daily
The daily chart for BABA depicts the strong bull move since the February
low. The current pullback gives us a buying opportunity.
We are going to review a Call Debit spread for BABA.
Traders who want more leverage can buy BABA calls. BABA has options
expiring every week until December 2nd. After that, BABA has options
expiring mid-December, January, February, April, January 2018, and
January 2019.
Buy to Open BABA December 2nd expiration 90-strike Call
Sell to Open BABA December 2nd expiration 100-strike Call
BABA stock price declines by -2.5%, stays where it is, or increases at all
when the options expire, the spread will make a 31.6%, or $240 profit. If the
stock price declines by -5% when the options expire, the spread will make
15%, or $114. If the BABA stock price is down -7.5% when the options
expire, the spread will lose -19.2%, or -$146.
The next profit opportunity we will consider is SOXL, the Direxion Daily
Semiconductor Bull 3X Shares ETF. SOXL seeks to yield results that
correspond to three times the daily performance of the PHLX (Philadelphia
Stock Exchange) Semiconductor Sector Index.
SOXL Monthly
The monthly chart shows that SOXL hit a new record high this month. As
we said above, new record highs are bullish.
SOXL Daily
The daily chart shows that SOXL has been very bullish since the June low.
If we compressed it more, you would see that SOXL tripled in price from
the February low to this month’s high. That’s Bull Power!
We are going to review a Call Option Debit Spread strategy for SOXL.
Traders who want a more leveraged approach could consider buying SOXL
calls. SOXL has options expiring in November, December, January, and
February.
Buy to Open SOXL December 16th expiration 35-strike Call
Sell to Open SOXL December 16th expiration 45-strike Call
SOXL ETF price stays the same or increases in price at all at expiration,
the spread will show a profit of 46.6% or $298. If SOXL declines by -2.5%,
the spread will make 29.2% or $187. If SOXL is down -5% when the
options expire, the profit will be 11.9% or $76. If the SOXL ETF price is
down -7.5% at expiration, the spread will lose -5.4% or -$35.
The last profit opportunity we will review is in ULTI, or Ultimate Software.

Ultimate Software’s primary product is UltiPro, a cloud based human
resource capital management solution for businesses. Ultimate Software’s
services are used in more than 160 countries.
ULTI Monthly
The monthly chart shows that ULTI has been in an uptrend since 2011.
ULTI hit a new all-time high in July. Although ULTI has paused since then,
there are no signs of a top.
ULTI Daily
The daily chart shows that ULTI was very bullish from the February low
until the July high. ULTI has been going sideways since then. A further
advance is expected.
We are going to review a Call Debit Spread for ULTI.
Traders who want a more leveraged approach could consider buying ULTI
calls. ULTI has options expiring in November, December, January, and
April.
Buy to Open ULTI January 20th 185-Strike Call
Sell to Open ULTI January 20th 195-Strike Call
We can see from the Call Option Spread Analysis Calculator that if ULTI
decreases by -5%, remains flat, or increases at all in price at expiration, the
spread will make 26.6% or $210. If ULTI is down -7.5% when the options
expire, the spread will lose -1.3% or-$10.
EARNINGS SEASON: There are four “Earnings Seasons” a year. The seasons begin in
January, April, July, and October and they each last about two months. The earnings
reports can have an impact on the stock price. We don’t know if the impact is going to
be positive or negative (or nothing at all). It’s up to you to decide if you want to be in a
trade when the earnings report is announced. Here’s a link for a page that can help you
keep track of the report dates:
https://www.earningswhispers.com/calendar
Note: Profit performance displayed in this newsletter does not include transaction
costs.
This newsletter includes some trading ideas following Chuck Hughes’ trading
strategies along with educational information. For a complete listing of Chuck’s
exact trades, including specific entries and exits and real time Portfolio tracking,
please call Brad at 1- 866-661-5664 or 310-647-5664

Optioneering Newsletter Oct 24

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Optioneering Newsletter

October 23, 2016

The Dow Monthly

The monthly trend is up and the long-term outlook is bullish. However,

Traders who want a more leveraged approach could consider buying

Buy to Open TQQQ November 18th expiration 111-strike Call

The next profit opportunity we will review is in BABA, or Alibaba Group

We are going to review a Call Debit spread for BABA.

The last profit opportunity we will review is in ULTI, or Ultimate Software.

We are going to review a Call Debit Spread for ULTI.

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