DailyPlay – Closing Trade (CRM) – May 17, 2024
Investment Rationale Markets have continued to provide a...
Read MoreWith major cybersecurity hacks seemingly occurring every week, cybersecurity as a sector remains an incredibly strong industry for investors. And as a leader in cybersecurity subscriptions and support, FTNT not only has a competitive edge but also exhibits strong fundamentals that align with its recent relative strength.
After gapping lower nearly 3 quarters ago below its key $74 support level, FTNT has rallied back up to this important resistance and is potentially ready to break out higher. Recent volume near its $67 support level has been encouraging and providing me with more confidence that FTNT has the relative strength and momentum to break out above $74 back towards its $80 52-week highs.
FTNT – Daily
FTNT currently trades at 40x forward earnings, which may seem high, but is on the lower end of its historical valuation. And we have to factor in the 22% EPS growth that analysts expect for this year and its incredibly strong financial position. With operating margins exceeding 23% and its low debt, FTNT is built for growth but has the balance sheet to whether any uncertainty.
Strategy: Long Call Vertical Spread
Direction: Bullish Debit Spread
Details: Buy to Open 6 Contracts May 17th $70/$80 Call Vertical Spreads @ $3.64 Debit.
Total Risk: This trade has a max risk of $2,184 (6 Contracts x $364) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $364 to select the # contracts for your portfolio.
Trend Continuation Signal: This is a bullish trade on a stock that recently broke higher off a level of support.
1M/6M Trends: Bullish/Bullish
Relative Strength: 8/10
OptionsPlay Score: 108
Stop Loss: @ $1.82 Credit. (50% loss of premium paid)
Use the following details to enter the trade on your trading platform. Please note that whenever there is a multi-leg option strategy, it should be entered as a single trade.
Please note that these prices are based on Wednesday’s closing prices. Should the underlying move significantly during the pre-market hours, we will likely adjust the strikes and prices to reflect a more accurate trade entry.
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