February 3, 2020 - MDT Alert (NTAP)

Today, I would like to make a suggestion on a stock that, like a lot of stocks recently, is oversold. That stock is NetApp Inc (NTAP).

NTAP is trading right at the extreme lower band on its 60 minute chart which is $54.32.

As I write this, it is trading around $54.47 or just above this level.

NTAP does report the 12th, after the close.

The suggestion will be an unequal straddle with a bullish bias.

The idea will be buying 2 calls for every 1 put.

This trade benefits if the stock bounces ahead of earnings. And an additional benefit could be IV expansion as it trades closer to the earnings date.

We will give the trade a few days to see if it does move and if it doesn't, I will close this quickly.

Buy to Open (2) February 14th - $54.50 calls @ $2.07. The 2 calls will cost $4.14

Buy to Open (1) February 14th - $54.50 put @ $2.06

Based on the nominal portfolio, limit the trade to a 2 lot or a total of $1,240. This is a 1.2% risk based on the nominal portfolio.

The end result if you trade the suggested position size, is that you will own (4) February 14th - $54.40 calls and (2) February 14th - $54.50 puts.

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