Options for stock investors. A better way to trade.

50% Profit Exit Coca Cola Cash In – Staying Power Play Eight Months

Cash In Conservative Coca Cola !!!


50% Profit Coke Exit


Place order to sell the KO June $40 Call at $5.25 or better for 50% profit in eight months.









Conservative Coca Cola  


New Trade Alert for (KO)

Buy Coca Cola June $40.00 Call @$3.75 or less


Risk Rating: 1.5     (1 = lowest   5 = highest)

Above Break Even Probability: 50%

Max Loss Probability: 24%


A solid year of Bulls Eye performance with 31 out of 35 winning closed trades in 2016 is optimistically positioned for the rally run to continue.


Acrophobia, the fear of heights, has many looking for more conservative plays at these lofty stock levels. 


DOW stocks have returned 5% so far this year though it has been more than a month since record highs were posted 300 points higher.  


Coca Cola has corrected, dropping 10% since the April top.  KO is down 5% in the last three months versus the positive 3% in that same period.  



The last two years of technical price action have KO mostly from $40 and $44 with support to lean on at the $42 mid-point pivot.  



An upside breakout targets $48 which is 15% above present prices.    


Only close below the $38 on a weekly basis would negate this bullish buying premise.



Back for another drink…

This is the second trade in Coca Cola this year as BULLS EYE OPTION Exited in March 



Place order to sell the KO January $38 Call at $8.65 or better for 50% plus profit in five months.





The Options Way: Unlimited Upside Potential with Limited Risk.

A KO long call option can provide the staying power for a market upturn.  More importantly, the maximum risk is the premium paid.


One major advantage of using long options instead of buying or selling shares is putting up much less money to control 100 shares — that’s the power of leverage.


Choosing an option can sometimes be a daunting task with all of the choices and expiration months and strikes.  Simply put, traders want to buy a high probability option that has enough time to be right.

The option strike price is the level at which you have the right to buy without any obligation to do so.  In reality, you rarely convert the option into shares. Simply sell the option you bought to exit the trade for gain or loss.  

There are two rules options traders need to follow to be successful.

Rule One:  Choose an option with 70% plus probability.  The Delta is a measurement of how well the option reacts to movement in the underlying security.  


It is important to buy options that payoff from only a modest price move.  There is no need to ONLY make money on the all but infrequent large price explosion.

Any trade has a fifty/fifty chance of success.  Buying options ITM options increase that probability. 


That  Delta also approximates the odds that the option will be In The Money at expiration.


Buying better options is more expensive, but they are worth it — the chances of success are mathematically superior to buying cheap, long shot Out Of The Money lottery tickets that rarely ever pay off.  
With KO trading at $42.25, for example, an In The Money $40.00 strike option currently has $2.25 in real or intrinsic value.  The remainder of any premium is the time value of the option.

Rule Two: Buy more time until expiration than you may need.  Time is an investor’s greatest asset when you have completely limited the exposure risks. 

Traders often buy too little time for the trade to develop.  Nothing is more frustrating than being right but only after the option has expired premature to the market move.


Trade Setup: I recommend the KO June $40 Call at $3.75 or less.



This option strike gives you the right to buy the shares at $40.00 per share with absolutely limited risk. The 52 week low is at $39.33 for perspective.


The June option has nearly nine months for BULLISH development.   A 70 Delta on this strike means the option will behave much like the stock.
The maximum loss is limited to the $375 or less paid per option contract.   A stop loss at half of premium paid reduces the dollar exposure.  The upside is unlimited.



The KO option trade break-even is $43.75 at expiration ($40.00 strike plus $3.75 or less option premium). That is $1.50 above the current  price.


A push above the $44 range top targets $48.  At that stock price level the option investment would gain more than 100% to $8.00. 

Leave a Reply

Your email address will not be published.