IBM - Weekly Swing Trade

1. IBM has moved up nicely after bottom in 1Q 2016. Prices exceeded the weekly 200sma for the first time in 18mths and have reached a Measured Move target around $184.
2. Prices are due for a 10bar/2 leg retracement or consolidation before continuing upward to test $190-$200.
3. Continue to watch the pullback and look for an entry near the Breakout level of $170, which also coincides with the 200sma support.
4. I will update with the options play as we get closer to an entry.
5. Prices have clean trend, respect for 34EMA and an RSI that peaked cleaning with price convergence. Good looking potential setup.

Comment:

I am looking for an entry at $171 (upper range of the most recent consolidation) and around $167 (weekly 200sma).
IBM calls are fairly expensive; however, a move back to previous highs will be profitable. The obvious concern is the same as LUV trade with 2 legs down from MM target. However, I think IBM is in stronger position with favorable 200sma at our back.
1. $171 entry. Buy Jun17 170 Calls @ $5.20 based on 0.67 Delta.
2. $167 entry. Buy Jun17 165 Calls @ $5.50 based on 0.81 Delta.

Good Hunting!

Comment:

Prices have declined to our first entry zone at $170.
I am willing to pay for some extra time to compensate for this trade trending down to the 200sma before resuming it's trend.
1. Buy Jun17 170 Calls as an ATM position. At current prices, I am willing to pay $6 for the option when prices cross $170. Take a 1/3 position.
2. Look for 2/3 position at the 200sma @ $167.

Trade closed: stop reached:

Unfortunately, IBM stock price was crushed by earnings today. I have been stopped out without building an additional position in the $161 price area