Options Trade Ideas for This Tech Leader for December 8

12/09/2014 8:00 am EST


Gregory Harmon, CMT

Founder and President, Dragonfly Capital Management

Greg Harmon, of Dragonfly Capital, takes a technical look at this tech leader that pulled back over the summer and bounced at the October market low then faced consolidation. Greg also suggests six possible ways to trade this stock including several option trade ideas.

United Technologies (UTX)

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United Technologies, UTX, pulled back over the summer and bounced at the October market low. Some short consolidation on the rise led to the creation of an Inverse Head and Shoulders pattern that triggered two weeks ago. This has a price objective to 120.75, about the prior high level from the Spring. The RSI is in the bullish zone and the MACD is level after the current move up. There is resistance at 111.75 and then 114 and 116.50 before 118 and 120. Support lower may come at 109 and the pattern is violated under 107. Short interest is low at 1% and the stock pays a 2.1% dividend.

Trade Idea 1: Buy the stock on a move over 112 with a stop at 109.

Trade Idea 2: Buy the December 110 Calls (offered at $2.75 late Friday).

Trade Idea 3: Buy the December 110/115 Call Spread ($2.20).

Trade Idea 4: Buy the January 110 /December 115 Call Diagonal ($3.10).

Trade Idea 5: Sell the January 110/115 Strangle ($3.30 credit).

Trade Idea 6: Sell the January 110/115 Strangle and buy the December 110 Put ($2.10).

By Greg Harmon of Dragonfly Capital

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