The Options Trader’s Guide to Technical Analysis
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#6 RHT April 30 Calls
By Jon Lewis, Winning Edge
If there’s one thing options players love to see, it’s movement. And few events lend themselves more to movement than earnings. That where Red Hat
(RHT) comes into play. The enterprise software developer reports Q4
earnings numbers on March 24.The thing I like about RHT is that it moves after earnings … usually by a lot. In fact, after the last four reports, the stock has gained
an average of 8% in the following week. That kind of move can yield a healthy return on an option.RHT hasn’t missed the Street’s earnings estimate in seven years, so chances are the stock will enjoy another post-earnings bounce. Adding to the
stock’s potential is the constant swirl of takeover rumors, made stronger by the recent offer for software rival Novell (NOVL).
Nothing like some takeover talk to goose the share price.It all adds up to a bullish play, so my pick is the RHT April 30 Calls (RHT 100417C00030000).
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