Optioneering Newsletter

August 7, 2016

The Dow Monthly

Last month the Dow hit another new record high. The close for the month
of July was the highest monthly close ever. New record highs are bullish.
The next targets are 20,000 and 22,250.

NOTE: It’s earnings season. Most major stocks will issue earnings reports
by the end of August. The reports can make an impact on the stock price.
We don’t know if the impact is going to be positive or negative (or nothing
 at all). It’s up to you to decide if you want to be in a trade when the
earnings report is announced. Here’s a link for a page that can help you
keep track of the report dates:

https://www.earningswhispers.com/calendar

The first profit opportunity we will review is in MLM, or Martin Marietta

Materials. Martin Marietta is a leading supplier of aggregates and heavy
building materials, with operations spanning 36 states, Canada, and the
Caribbean. In particular, Martin Marietta supplies the resources for roads,
sidewalks and foundations.

MLM Monthly
The monthly chart for MLM has a bullish pattern of higher highs and higher
lows. Long-term, it hasn’t been the smoothest trend, but it’s been going
straight up since this year’s low.

MLM Daily

The daily chart also shows that MLM has been powerfully bullish since this
year’s low. The pullback to the Mid-Line of the Keltner Channel gives us a
new buying opportunity.

We are going to review a Call Debit Spread for MLM.

Traders who want a more leveraged approach could consider buying MLM
calls. MLM has options expiring in August, September, October, January
2017, and January 2018.

Buy to Open MLM October 21st 175-Strike Call

Sell to Open MLM October 21st 185-Strike Call

We can see from the call option spread analysis calculator that if the MLM
stock price decreases -5%, stays where it is, or increases at all in price at
expiration we would profit by 25% or $200. If MLM is down -7.5% when the
options expire, we will make 5.5% or $44.

The next profit opportunity we will consider is ELLI, or Ellie Mae. Ellie Mae,
is a software company that processes almost a quarter of U.S. mortgage
applications. Ellie Mae services are based on a ‘software as a service’
model that provides, streamlines, and automates the process of originating
and funding new mortgage loans and facilitating regulatory compliance.
 ELLI Monthly

The monthly chart shows that ELLI has been in a very strong bull trend.
 ELLI Weekly

It hasn’t been the steadiest uptrend, but the daily chart definitely has a
bullish pattern of higher highs and higher lows. The little pullback gives us a
new buying opportunity.

We are going to review a call option debit spread for ELLI.

Traders who want a more leveraged approach could consider buying ELLI
calls. ELLI has options expiring in August, September, October, January
2017, and January 2018.
 Buy to Open ELLI October 21st expiration 80-strike Call
Sell to Open ELLI October 21st expiration 95-strike Call

We can see from the Call Option Spread Analysis Calculator that if the
ELLI stock price declines by -2.5%, stays the same as it is now, or
increases in price when the options expire, the spread will make a 27.7%,
or $325 profit. If ELLI is down -5% when the options expire, the spread will
show a profit of 7.6%, or $89. If ELLI is down -7.5% when the options
expire, the spread will lose -13.1% or -$154.

The next profit opportunity we will review is in TSLA, or Tesla Motors. Tesla
is an automotive and energy storage company that designs, manufactures,
and sells electric cars, electric vehicle powertrain components, and battery
products.
 TSLA Monthly

The monthly chart shows that TSLA stock price rose from below $50 in
2013 to almost $300 in 2014. It’s been trading in a very wide range since
the 2014 high. In February it looked like Tesla was going to break support.
However, it turned back up and finished with a wide range bullish reversal
with a monthly close above the support line. TSLA continued to rally in
March and April. The current pullback is expected to yield to a further
advance.
 TSLA Weekly

The weekly chart shows the strong rally from the year’s low. The rally was
followed by a three wave pullback from the April high. Now a higher low
bottom appears to be in place at the June low. Higher low bottoms point to
higher high tops. If the higher low bottom setup works, TSLA should rally
through this year’s high.

We are going to review a Call Debit Spread for Tesla.

Traders who want a more leveraged approach could consider buying Tesla
calls. TSLA has options expiring every week until September 23rd. After that
TSLA has options expiring in October, December, January, March, and
January 2018.
 Buy to Open TSLA October 21st expiration 200-strike Call
Sell to Open TSLA October 21st expiration 210-strike Call

We can see from the Call Option Spread Analysis Calculator that if the
TSLA stock price declines by 7.5%, stays where it is, or increases at all
when the options expire, the spread will make a 26.6% or $210 profit.

The last profit opportunity we will consider is AET, or Aetna. Aetna is an

American managed health care company that sells traditional
and consumer directed health care insurance plans and related services,
such as medical, pharmaceutical, dental, behavioral health, long-term care,
and disability plans.
 AET Monthly

The monthly chart shows that AET was in a very strong bull trend from
2012 until 2015. This year’s trading suggests that the subsequent pullback
is over and the uptrend is resuming.
 AET Daily

This year AET rallied from below 93 to above 123. That’s a nice move! AET
has been going sideways since the June high. Sideways trading in a bull
trend usually yields to a further advance.

We are going to review a Call Debit Spread for AET.

Traders who want a more leveraged approach could consider buying AET
calls. AET has options expiring every week until September 23rd. After that,
AET has options expiring in October, November, January, April, and
January 2018.
 Buy to Open AET November 18th expiration 100-strike Call
Sell to Open AET November 18th expiration 115-strike Call

We can see from the Call Option Spread Analysis Calculator that if the AET
stock price declines by -2.5%, stays the same, or increases in price at all at
expiration, the spread will show a profit of 25% or $300. If AET declines by
-5% when the options expire, the spread will have an 11% or $133 profit. If
the AET price is down -7.5% at expiration, the spread will lose -13.8% or
-$166.

Note: Profit performance displayed in this newsletter does not include

transaction costs.

This newsletter includes some trading ideas following Chuck Hughes’ trading
strategies along with educational information. For a complete listing of Chuck’s
exact trades, including specific entries and exits and real time Portfolio tracking,
please call Brad at 1- 866-661-5664 or 310-647-5664