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Trade Of The Week: Today’s LITT Longs

June 30, 2021

Trade Of The Week: Today’s LITT Longs

Today we have 5 LITT Longs flagged by our trading scanners. I will run through each of these trades briefly and highlight how our trade scanners work.

Today we have 5 LITT Longs flagged by our trading scanners. I will run through each of these trades briefly and highlight how our trade scanners work.

Brambles Limited

Source: Implied Volatility

Brambles Limited (BXB) was flagged again intraday as the stock pushed past the $11.50 level into 52 week highs. However BXB was unable to hold price action above this level, and the stock is still trading below pre-COVID highs which were above $13.00 per share.

We see the next resistance level around $11.65 to $11.75, then around $12.00 level.

The ADX is well above 20 hinting at a directional bias in the price action. However to be flagged again the stock will need to push past today’s high of $11.58. 

The 50 Day MA crossed over the 200 day MA on the 1st of June 2021 and both moving averages are positive sloping.

 

Source: Implied Volatility

 

Source: Implied Volatility

Iluka Resources Limited

Source: Implied Volatility

Iluka Resources (ASX:ILU) gapped above it’s previous resistance at the $8.90 level and continued higher, before the sellers re-entered forming a shooting star candle.

The stock has recently had it’s ADX jump back above 20 after effectively trading sideways since the last breakout on May 5th 2021.

Be careful when entering this trade – there is some strong selling pressure above the current price point, evidenced by the quick sell-off. When the stock has previously jumped quickly like this it has been followed by a quick pullback (20/2/21, 23/10/20). The period of strong price growth between the 5th of May to the 10th of May 2021 was also followed by a quick pull back over the 11th of May to the 20th of May 2021.

The best entry point for a bullish trade may be when it shows evidence of bouncing off the 50 day MA again.

Source: Implied Volatility

Source: Implied Volatility

 

Mineral Resources Limited

Mineral Resources Limited (ASX:MIN) has been experiencing strong price growth since March 2020 and has followed through since being listed as an optionable stock. The business has been well placed with strong commodity prices and diversified mining services.

The stock had recently been experiencing some resistance around the $50.00 mark but has pushed through to all-time highs once again.

The stock was first flagged for a LITT Long trade on 10th of May 2021 straight after becoming optionable, then again on the 15th of May 2021.

Source: Implied Volatility

Source: Implied Volatility

Source: Implied Volatility

Telstra Corporation Limited

Telstra Corporation Limited has jumped on news of selling 49% of the InfraCo Towers business for $2.8 billion to a consortium comprising of the Future Fund, Commonwealth Superannuation Corporation, and Sunsuper who will become strategic partners. Telstra still retains the controlling stake with 51% ownership.

Telstra is planning to return 50% of net proceeds to shareholders in FY22.

This move has boosted the ADX above 20. Over the short term we should see the market decide whether Telstra has been successful in unlocking value from this business. So far it looks like this is the case.

Source: Implied Volatility

Source: Implied Volatility

Source: Implied Volatility

Wesfarmers Limited

Wesfarmers Limited (ASX:WES) has continued to break out and create value for shareholders since late 2018. The stock had a significant pull-back in March 2020 and has recovered since, breaking pre-COVID highs in August 2020 when the rest of the market was still struggling.

There have been a few bounces and dips with the market gapping below the 50 day MA after the ex-dividend date on 23rd of February 2021. The stock found support at $49.50 and has bounced back, with the 50 day MA acting as a strong support since.

We should expect some resistance at $60.00, but if the stock can break through there could be a strong rally.

Source: Implied Volatility


Source: Implied Volatility

 


Source: Implied Volatility

These LITT Long trade ideas are all across-the-money bull put spreads. The Implied Volatility platform uses a proprietary algorithm to optimise the strikes of the position which considers implied volatility, time, and price weighting that gives an approximate target strike price, then selects the closest actual strike available that is available and suitable.

If you would like some more information on options trading strategies, 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. Please note, we provide General Advice only and do not take into consideration your own personal circumstances, you must decide if it’s appropriate for you. 

 

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 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.

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