Sun Shine SPWR 150% profit in 2019, 80% profit in 2018 and 56% profit in 2017
New Trade Alert for (SPWR)
SunPower January $8.00 Call @$3.00 or less
Risk Rating: 3.0 (1 = lowest 5 = highest)
Above Break Even Probability: 45%
Maximum Loss Probability: 36%
ALL ABOUT MACRO MARKET
S&P, DOW and Tech have all gotten back half of the drop from the fall of 2018 top.
Reminder, every selloff in market history has bounced back to make new higher highs…
The future is bright!!!
BACK TO BREAKOUT BASE
SunPower had tracked from $5 to $10 from the middle of 2016 to January of this year.
SPWR is now 35% from the August top though the stock is STILL STRONG up over 100% in the last 52 weeks.
SunPower had been stuck in a $5 to $10 trading range over the last few years. The breakout from this base targets $15 again last seen in 2016.
This was a $40 stock just three years ago.
The Options Way: Unlimited Upside Potential with Limited Risk.
A SPWR 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.
Modest stock moves can mean big payoffs in options.
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 SPWR trading at $10.25, for example, an In The Money $8.00 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 SPWR January $8 Call at $3.00 or less.
This option strike gives you the right to buy the shares at $8.00 per share, with absolutely limited risk.
The January option has three months plus for BULLISH development. An 78 Delta on this strike means the option will behave much like the stock.
The maximum loss is limited to the $325 or less paid per option contract. The option upside is unlimited.
The SPWR option trade breakeven is $11.00 at expiration ($8.00 strike plus $3.00 or less option premium). That is 75 cents above the current price.