Thursday, February 7, 2008

ANAD - Possible Hit and Run Trade

What does todays trading in ANAD tell us about the next two days in the stock?

ANAD formed an outside day (Higher High & Lower Low) with a strong reversal close.

This pattern is very bullish for the stock and especially bullish over the next 2 days.

Aggressive traders can look to capitalize on this high probability pattern with some call options and hit and run the trade.

Has the stock put in a strong intermediate term low?
It is to early to tell, but it is a strong possability.

For the time being however, we have this hit and run trade and I would favor the in the money calls. Perhaps the March 7 1/2 calls. I would not go into the February calls as if simply because if they don't rally the stock then you are going to get hit hard by theta decay or a large contraction in premium. Going out to March does not cost that much more and it eliminates the premium risk.

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