As we mentioned earlier in the week, we were watching a couple options opportunities based on chart setups. Even though we have no talked about options as much, we favor them over traditional stock trading. The reason for this is because they have much more upside potential than stocks (they also carry more risk). Option plays are strictly through technical analysis. When identifying favorable option setups, we usually know nothing about the company. We probably couldn't even tell you what sector the stock is in. It's amazing what technical analysis can do if you take the time to learn it. Obviously we do research on longer term stock opportunities, but for short term option plays we could care a less what the company does business/sector wise!
$BIDU - Baudi Inc (March 16, 2018 $262.50 Calls)
In initial chart outline, we were liking the setup after $BIDU accelerated through $249 resistance levels. We thought with this confirmation it had a good shot of testing $261 resistance in our opinion. The stock did indeed do this and people that got into 262 calls early reaped the benefits of this today. As you can see from the quote box today, these option contracts were up over 138% today! You can see the power of options because the stock was only up 2.5% on the day yet option contracts were up 138%.
$LRCX - LAM Research Corp (March 16, 2018 $220.00 Calls)
In our initial $LRCX chart setup, we were watching for the $207 resistance break. We thought that this break would signal additional upward momentum to the $220 levels in our opinion. Many thought a run to $220 would be too much to ask, but with an expiration of March 16, we saw it as enough time to reach these levels in our opinion. The stock was on power mode today and it reached $220 target levels nearly a week early before expiration. With this being said, people who identified this opportunity on charts got in early and reaped the benefits again. The option contracts were up 424% today. That is not a typo! The stock was up 5% on the day yet the options were up 424%. This further explains how options have much more opportunity than traditional stock trading if you know what your doing/looking for! You can again see the quote box below to validate.
Now the crucial thing to remember is options have much more risk than traditional stock trading. The upside of 400% can go down 400% just as quickly. That's why it's important to learn technical analysis, so you can utilize strategies and know what your getting into.
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