Navivest Stocks and Options Blog

Technical Trader – Cummins Inc

Jul 21, 2010 Options, Stocks, Technical Analysis

Cummins Inc (CMI) is up $1.51 to $74.05, currently one of the strongest performers among S&P 500 stocks. However, the stock will form a double top if continues to advance and hits its next resistance area of $75. Traders might want to look at shorting the stock above $74.50 or selling call the September 85 calls, which are asking $1.20.

Tags: cummins inc, options writing, sell calls, Technical Analysis

Making Money Selling Options

Jul 16, 2010 Options

On June 25, we sent out a trading alert to subscribers of our Navivest Options Writer service, recommending they sell (write) the Goldman Sachs (GS) July 155 calls. From a technical analysis standpoint, we felt the stock would have a hard time clearing the $140 area and if that happened, $150 would also prove to be a strong resistance area as well, before the options expired, making the stock a very good candidate for writing options on. There was also the overhang of the fraud charges by the SEC over the company.

We got $2.04 for each call we sold and the recommendation proved correct, as through July 13, the stock never broke above $141.

Towards the end of the trading session yesterday, during the last thirty minutes, the stock started surging on word that the company had reached a settlement agreement with the SEC over the fraud charges and the stock ended up climbing $6.16 to close at $145.22.

After hours, the stock kept rallying, touching $152. Today, in early going, the stock is now at $149.55, up $4.33. With July options expiring today, even with the big gain in the stock, it looks unlikely that the stock will climb above $155 and get called away on us, making this another winner for the Navivest Options Writer service.

With 80% of all options expiring worthless, writing calls is a great way to put the odds in your favor when trading options, as highlighted by this trade.

Tags: goldman sachs, Options, sell calls, writing options