SPLS becoming a Staple in the portfolio... Call Options to Capture the Upswing!!

In my fortunes and follies of trading options I have learned to look for momentum, and finding momentum off of an unreasonable downturn to return to previous levels is my favorite kind of momentum. I have traded Staples before and have made some money off of the stock. The company has become undervalued and is looking for a good bump up a few dollars in the coming months.

A couple of things I like about the movement of SPLS is that it dropped suddenly on some bad news but it dropped off of positive momentum. After the drop it is quickly gaining steam on several days of upward momentum with growing volume well above the average trading for this stock. I think we are looking at a stock that will return to previous levels at or near $13 dollars in the coming months. 

The chart is simple but paints a good picture of a huge shift downward on bad news (an over reaction to news is not uncommon). But with building faith and good news on the company that is creating a positive outlook.  

I don't anticipate this being a long term trade, a couple of weeks at most, It may give back some of today's gains but having purchased some in-the-money call options I don't expect the option to be as volatile as the stock. What is important is maintaining upward momentum over the next few weeks and the in-the-money calls, especially those a long way out should benefit nicely. 

I'll let you know how it turns out!

Thanks for reading!

Straight from the Chart 

Disclaimer:
Just to be clear, nothing that I'm posting on this blog is in any way advice that should be followed by anyone else. All investment decisions should be made carefully by all individuals taking into account their own financial situation and appropriate levels of risk. Do not take anything I say for anything more than it is, opinion, speculation, and woefully undereducated guesses as to how I think a few stocks are going to perform.