Talk about trying to take advantage of a sell-off! Adobe Systems may be just the stock.
Fundamentally, ADBEWealth Strength IndexAAPL is Extremely Up and trending Up has seen a dozen upward revisions over the past 60 days with ZERO downward revisions. Yes, the stock had rallied $80 year to date before some decent profit taking hit the market. The stock is now almost 10% off it’s highs and is hovering at it’s 50 day moving average.
A purely technical trader might look at this graph and make a decision on the tremendous support that the 50 day moving average has shown over the last 7 months. But the combination of the strong support in addition to the strong fundamental news presents a fantastic upside opportunity.
We sent a signal to buy what is known as a “broken wing call butterfly.” We selected the July 27th weekly expiration 245/252.5/255 strikes. This strategy is a combination of a long call spread and a short call spread. In this signal, the long spread is $7.50 wide and the short spread is $2.50 wide. We chose the “center” strike of $252.5 because the option market is pricing in a move of approximately $14 from now until July 27th. The signal price of $1.75 represents a Reward/Risk of well over 3.25:1 and a great upside opportunity.