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Trade Of The Week: Long Call – ANZ

February 3, 2021

Trade Of The Week: Long Call – ANZ

With the big 4 banks all rising over the last 3 trading days we will be looking at a short term bullish break out trade on ANZ.

With the big 4 banks all rising over the last 3 trading days we will be looking at a short term bullish break out trade on ANZ.

The big 4 banks often trade in sync with each other. When they are all lined up at major support or resistance levels their moves can be quick – and due to their size these moves can affect the whole market.

Source: Implied Volatility

Both CBA and NAB have gapped above their previous resistance levels (around $86.75 and $24.40 respectively). These stocks continued to rally above these levels for the session, hinting at continued buying pressure in these markets.

WBC has been lagging the other major banks this year and we expect it to meet further resistance in the coming trading days around the $21.90 level before breaking through.

ANZ hasn’t yet gapped above it’s current resistance level and has continued to feel resistance around $24.90 during today’s session. ANZ’s candle is green today and is testing resistance on the close.

If ANZ can gap above this resistance level on the open, we should expect the market to trade higher during the day, just as CBA and NAB have done today.

Source: Implied Volatility

To take advantage of this move we want to enter into a long call. 

Enter Long Call:

Buy ANZ $25.00 18 Feb 2021 Call (A)

 

We will set the strike at $25.00 which is the closest strike to the current resistance level. If the breakout fails to materialise, the stock may continue trading around the $25.00 level (as it did between the 15th to 27th of January 2021).

The expiry date will be February’s monthly expiry, so we do not experience too much time decay while this break out move occurs, and so we have sufficient liquidity to enter and exit the position over the coming days.

Depending on how quickly ANZ moves this could be a very quick trade. We will set the exit price for the underlying around $26.00. If the market trades towards this level quickly, you could take the profits early.

 

If you would like some more information on options trading strategies, please call 1300 805 795. 

You can also follow this link for a detailed tour of the Implied Volatility platform.  

To try trading for yourself using the most powerful Options Trading technology in Australia, click here for a trial for our Implied Volatility platform

 

We wish you good luck with your trading, and as always if you have any questions, please feel free to contact our trading desk on (03) 8080 5795. Please note, we provide General Advice only. 

 

Past performance is not a reliable indicator of future performance. 

The opinions expressed in this article are our personal views. 

Trading options is not suitable for everyone. There is a risk that you can lose more than the value of a trade or its underlying assets. You should only trade if you are confident that you fully understand what you are doing. If you are thinking about acquiring a financial product, you should consult our Financial Services Guide (FSG) at www.reachmarkets.com.au first. 

 


General Advice Warning

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