Medium term
/
Buy
Trade view / 23 June 2017 at 11:08 GMT

Trade view: One way to move into Under Armour shares

Product Manager, Options Trader, Educator
Denmark
Instrument: UAA:xnys
Price target: 22.50
Market price: 19.24
Background
There could be a bullish trade in development as shares of Under Armour seem to have support near $18.60. If this indeed is a short-term support levels we might be having a short-term uptrend as per definition of higher highs and higher lows. 

UA
Source: Saxo Bank

Shares closed today at $19.24 shy of the intraday high of $19.78 but still above yesterday's high making it these levels a potential slam dunk. On the fundamental front, Golden State Warriors and their star player Steph Curry recently won the NBA finals and we could also see a good debut of the Steph Curry4 basketball shoes. The company is set to report earnings on July 27. 

Implied volatility has been rising as a result of the shares moving down. We are therefore going to approach this trade in two steps: sell a cash secured put and buy a long call or a synthetic long stock. 

If volatility is low and trader feels confident buying a call option makes sense as it is a simple bullish strategy involving minimum risk, e.g. the cost of the call. When volatility is up, however, premium of the options both calls and puts would also be higher. Thus, making a little bit harder to make money with a long option.

Management and risk description
If shares decline below our short strike price of 18.50, we will be obliged to buy the shares at that price. Moreover the share could decline further.

UA Synthetic
Source: Dynamic Trend/Saxo Bank 

Parameters
*Use the multi-leg ticket for the trade
Underlying: Under Armour (UA)

Status: opening trade

Trade: Buy + 1 Combo UA 100 (Weeklys) 28 July 17 20/18.5 Call/Put at $0.06 or better

Maximum gain: unlimited**

Maximum loss: unlimited**(if assigned the shares and stock goes to zero)

Breakeven: 20.07

** numbers above are at expiration and do not include cost of commission and other fees


Entry: Today as a combo or two individual trades

Stop: No stop

Target: $22.50 or higher

Time horizon: 30 days

— Edited by Clemens Bomsdorf

Non-independent investment research disclaimer applies. Read more
A compiled overview of Trade Views provided on TradingFloor.com is found here
2y
SierraPt. SierraPt.
Can you please explain why it's better than just buy the shares?
2y
Georgio Stoev Georgio Stoev
With one word- leverage.
2y
SierraPt. SierraPt.
And if comparing to CFD?
2y
Georgio Stoev Georgio Stoev
there is no financing cost for the trade example, just the debit paid of $0.06
2y
Georgio Stoev Georgio Stoev
Leverage could be also much higher. getting in at 6 cents to potentially make 1 or two dollars. Of course you can end up with the shares. So bullish strategy

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