Although Red Hat's recent earnings reports weren't so hot for investors, the technical analysis points to RHT being a value buy with great potential.
The consolidation of this stock since its earning selloff is consistently reaffirming the resistance level around 134, and its closing in should force it at least some to the upside soon. In the short term, the stock has room to move up to its recent pre-earnings level for an over 9% upside potential. This move will probably come with some resistance around 140.50 if it happens. After reaching the pre-earnings level, another move to the upside breaking the 2 month high would allow for the start movement up to its Spring levels in the 170's.
Realistically, with some bullishness from the earnings shortcomings, I do not see this stock recoverin the same momentum it had just yet. Movement past the 148 level will probably be quite slow and labored unless this quarter's report is more appealing.
For options, mid-November and December expirations around the $138 to $140 strike range look great to me, especially if it can move up past that 141 range in the next month or so. Shorter expirations are risky, but could pay off if it sees a quick bounce. Personally, I will prefer spreads for long-term movement up to the 170's to reduce exposure to further earnings reports and unforeseen bearish sentiments, but regardless, I think calls are best focused in the $150-160 strike range for June 21. These are my personal opinions for my own trading preferences and risk tolerance and are not recommendations for others' investments. Remember to do your own due diligence and honestly assess your own risk tolerance!
The consolidation of this stock since its earning selloff is consistently reaffirming the resistance level around 134, and its closing in should force it at least some to the upside soon. In the short term, the stock has room to move up to its recent pre-earnings level for an over 9% upside potential. This move will probably come with some resistance around 140.50 if it happens. After reaching the pre-earnings level, another move to the upside breaking the 2 month high would allow for the start movement up to its Spring levels in the 170's.
Realistically, with some bullishness from the earnings shortcomings, I do not see this stock recoverin the same momentum it had just yet. Movement past the 148 level will probably be quite slow and labored unless this quarter's report is more appealing.
For options, mid-November and December expirations around the $138 to $140 strike range look great to me, especially if it can move up past that 141 range in the next month or so. Shorter expirations are risky, but could pay off if it sees a quick bounce. Personally, I will prefer spreads for long-term movement up to the 170's to reduce exposure to further earnings reports and unforeseen bearish sentiments, but regardless, I think calls are best focused in the $150-160 strike range for June 21. These are my personal opinions for my own trading preferences and risk tolerance and are not recommendations for others' investments. Remember to do your own due diligence and honestly assess your own risk tolerance!
Trade closed: stop reached:
Well, you win some and you lose some. Lost a little on this one. Closed out yesterday on my calls.