Using a similar trade setup from an October post, which resulted in gains of 155% within 10 days. Since returning to it's 52 week low in min-November, CVS has rallied back into the ~$100 area. Its current rally has lasted 21 trading sessions, nearly identical to the length of the 20-day October rebound.
It now faces several significant points of resistance: 1) back testing the channel that it previously broke down out of in mid-November, 2) the $100 previous gap and psychological level, 3) the descending trend line formed by the previous two peaks, 4) the RSI backtesting the longstanding trend line, and 5) the RSI having returned to the level (53) where CVS previously peaked in late-Oct. General market also appears heavy - the S&P 500 is down 0.75% today, following a retest of its 200 day MA.
Bought some Feb '16 $95 puts @ 2.05/contract. CVS shares were last trading at $98.51. First target is between $94 & 95.5. Allowing a maximum of 20 trading days for this trade, with a stop loss just above $100.
12/28/2015 - 11:21am EST
Comments
DavideG
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Further downside seems to be in store, but anticipate CVS will find some short term support at $94. Will be watching for the next trade.
DavideG
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Target hit this morning. Exited @ 3.40/contract (CVS last trading at $94.67), resulting in a profit of 65% within 9 days. 1/7/16 - 9:47am EST