by admin 2020年7月9日 0 Comments

Trade Update $COST

COSTisnearingthe$110supportlevelthatweoutlinedinourtradeideafromacoupleweeksback?

Ourputpurchaseisup70%herewithonly1weektoexpiry,soweregoingtotakethegainonthistradeandmoveon。

ACTION–COST($111。

96)?

SelltoClosetheApr4th115Putat$3。

10fora$1。

30Gain

NewTrade$COSTCutting,March13,2014

COSThasbecomerangeboundoverthepastninemonths,afteramonsteruptrendfrom2009to2013shigh,aperiodinwhichthestocktripled,andbecameoneofthelargestretailersintheworld。

Thedailychartshowsthecurrentrangeboundsituation:

COSTdaily,200daymainyellow,CourtesyofBloomberg

Thestockbouncedoffthe$110supportlevelatthelowsinearlyFebruary?

ThatwasaverysteadydowntrendfromearlyDecembertoearlyFebruary?

Sincethatbouncethough,thestockhasstruggledatgettingabovethe$115-$116area,whichcoincideswiththe200daymovingaverage,whichwasbrokenforthefirsttimeinmorethan2years。

Thestocksfailureatthe200daymaisaconcerningsignonthetechnicalside,buttheotherissueisthecontinuedweakfundamentals?

DanfirstlaidoutournegativethoughtsonCOSTinaMorningWordpostinDecember,withthefollowingconclusion:

Buttechnicalsaside,COSThasnowmissedearningsfor2straightquarters,registeredonly1%year-over-yearearningsgrowthforboth?

Thefirstmisscouldbeforgivenasaone-offevent,butnowthatit’stwoinarow,marketparticipantscouldstarttoaskmorequestionsabouttheunderlyingstrengthofCostco’sbusiness?

Itcouldbesaturationfrompriorgrowth,increasedcompetition,orsimplyapoormacroenvironment?

Whateverthereason,COSTshareholdershavehardlyratcheteddownexpectationsdespite6monthsofweakoperatingresults?

Thatmightchangeaftertoday。

SinceDecember,COSTnumbershavenotimproved?

Infact,wevebeensurprisedatthestocksresiliencesinceitsterribleFebruaryearningsreport,thoughmanyinvestorsclearlywroteitofftotheweather,andexpectbettergrowthfortherestof2014?

Thosehigherexpectationscouldbesettingupfordisappointment。

Addthetechnicalandfundamentalsituation,andwelikeplayingforamovebacktothe$110supportlevelinthecomingweeks:

Trade:COST($114。

68)BuytheApr4th115Putfor$1。

80

Buy1Apr4th115Putfor1。

80

Break-EvenonApril4thWeeklyExpiration:

Profits?

below113。

20gains

Losses?

Between113。

20and115,loseupto1。

80?

above115,losethefull1。

80

Rationale?

COSThasfailedattheimportant200daymovingaverage?

Wewanttoplayforapullbackoverthenextfewweeks,andstillcapturethepotentialsame-store-salesnumbercatalyst,whichisslatedtobereleasedonApril3rd?