VMW Stock – VMware Trading Journal with VantagePoint

VantagePoint Trading Software is a forecasting tool that uses both end of day data and Artificial Intelligence to provide traders a forecast of market movement. These forecasts are 1-3 days in advance and help traders improve their timing on making trades and maximizing profit potential. The Artificial Intelligence software forecasts market movement for stocks, futures, Forex, ETFs and Cryptocurrencies. VMware, VMW Stock, is in focus today…

This journal entry looks at the recent market movements of VMware, NYSE: VMW Stock

VantagePoint Trading Journal VMW Stock

The first batch of American sanctions on Iran has come into effect, 90 days after the U.S. withdrew from the nuclear deal. The new measures ban the sale of U.S. currency to Iran’s government sanction trade in precious metals and industrial materials, outlaw the purchase of Iran’s sovereign debt, and restrict the country’s auto and aerospace sector. Unless Iran complies with the U.S. demands, far-tougher steps will take effect on Nov. 5, when the U.S. will cut off Iran’s oil exports and impose sanctions on shipping.

Let’s consider VMware, Inc. (ticker: VMW):

VMW Stock

The VantagePoint platform recently indicated upside momentum.

Using the predictive indicators embedded within VantagePoint and its predictive AI technology, we will point out three significant things. We have a bullish crossover indicated by the blue predictive indicator line crossing above the black simple moving average on August 2nd.  We can combine that with the VantagePoint propriety neural index indicator moving from the RED to the GREEN two days before.  This indicator measures strength and weakness for a 48-hour period, in this case strength.  The move to the GREEN position further makes the case for a potential bullish scenario. We also have the predicted high and low above yesterday’s actual high and low indicating further strength.  I want to play the VP bullish indication.

Strategy Discussion

If one was strictly a stock trader, buying VMW in the $151.00 area could be prudent.  You are anticipating a move to the upside.  As a protective measure, it is always good practice to place a sell-stop order.  In this case, placing that order in the $147.50 area will mitigate potential losses.

For active traders with a shorter investment time horizon, you can consider a setup utilizing options. Given the market conditions outlined above, taking an active, premium debit approach may be the best path to success.

Because of the reasons given above, the purchase of a debit call spread may be one way to approach this situation.  You will first want to calculate your target strike.  In order to do this, you will need three pieces of data:  current price, expiration date and the implied volatility associated with that expiration date.  For VMW, that yields a target strike of ~$158.00.  You may want to consider the VMW August 17th regular expiration 155/157.5 call spread, buying it for $0.70.  The most you can lose is the premium paid and the most you can gain is the width of the spread less any premium paid.  Max risk = $0.70 and max reward = $1.80.  This means that you are getting odds of 2.57:1.

Given the trading and market environment outlined above, a trader must evaluate whether this reward/risk ratio is appropriate for his/her risk tolerance.