News

Trade Of The Week: Long Call on BXB

November 10, 2021

Trade Of The Week: Long Call on BXB

Brambles Limited (ASX: BXB) has recently fallen from around $12.50 down to slightly above $10.00, forming a double bottom then bouncing back to its current share price around $10.50. This bounce back is important as it places the share price on a major historical pivot point. On the 20th of May 2021, when the market broke through this resistance level, it shot up to $11.50 over the next month. This means there is significant upside if the stock repeats this behaviour.

Brambles Limited (ASX: BXB) has recently fallen from around $12.50 down to slightly above $10.00, forming a double bottom then bouncing back to its current share price around $10.50. This bounce back is important as it places the share price on a major historical pivot point. On the 20th of May 2021, when the market broke through this resistance level, it shot up to $11.50 over the next month. This means there is significant upside if the stock repeats this behaviour.

The stock has already broken through the $10.40 resistance level. The stock is attempting to break through the $10.50 level. The next resistance level will be around $10.75. You could wait for confirmation of the stock breaking $10.50, however there are resistance levels all the way up to $11.50, spaced around 10c or 25c apart. It will be easy to miss the bullish move.

Source: Implied Volatility

With the stock trading sideways over the past 5 days, we may see a small pullback and a bounce, or we may see some buyers re-entering the market now the price has consolidated. One thing to be wary of is the 4 consecutive days of red candles, however during late July and early August 2021 there was consecutive days of red which lead into a sizeable jump mid-September.

Source: Implied Volatility

Enter position:

Source: Implied Volatility

This long position will be theta negative. This means the longer you hold it, the more it will decrease in value, ceteris paribus. If you expect a long term recovery in this stock, it may be worth extending the expiry date further out.

Exit position:

We’ll be looking at closing the position around the 200 day MA. If you want to take your gains earlier, you can close when the share price meets the 50 day MA. A break towards $11.00 or $11.50 may be a long shot over the next month, however if the stock breaks the 50 and 200 day MA’s, the stock may fly past the following resistance levels due to positive sentiment and  momentum.

For further information on using the Implied Volatility platform you can follow this link, here.

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. 

Any advice provided by *Reach including on its website and by its representatives is general advice only and does not consider your personal objectives, financial situation or needs, and you should consider whether it’s appropriate for you. This might mean that you need to seek personal advice from a representative authorised to provide personal advice. Please click here https://reachmarkets.com.au/general-advice-warning/ to read our full general advice warning.

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. From 5 October 2021, under Design and Distribution Obligations, anyone opening a trading account will be required to meet the Target Market Determination criteria of Phillip Capital and subject to an assessment the results of which will determine your eligibility for a trading account, for further information please see here.

If you are thinking about acquiring a financial product, you should consider our Financial Services Guide (FSG) including the Privacy Statement and any relevant Product Disclosure Statement or Prospectus (if one is available) to understand the features, risks and returns associated with the investment.

Please click here to read our full warning.

Any advice provided by Reach Markets including on its website and by its representatives is general advice only and does not consider your objectives, financial situation or needs, and you should consider whether it is appropriate for you. This might mean that you need to seek personal advice from a representative authorised to provide personal advice.


General Advice Warning

Any advice provided by Reach Markets including on its website and by its representatives is general advice only and does not consider your objectives, financial situation or needs, and you should consider whether it is appropriate for you. This might mean that you need to seek personal advice from a representative authorised to provide personal advice. If you are thinking about acquiring a financial product, you should consider our Financial Services Guide (FSG) including the Privacy Statement and any relevant Product Disclosure Statement or Prospectus (if one is available) to understand the features, risks and returns associated with the investment.

Please click here to read our full warning.

Receive up-to-date business news and industry announcements to your inbox

Leave a comment