DECK is grinding higher with RSI rising above the 50 zone. Price is above the bullish SOTEMA, nearing a break into the Kirby overhead (dashed horizontal).
If MACD flattens, this would lend opportunity for income traders. Being earnings are scheduled for May 24, there are ample strikes on the weekly time frame that can be traded on this candidate. We would consider next weeks expiry as a potential short term trade and repeat each week.
For each 100 share lot, you could generate $240 by trading a covered call. You could sell 1 contract of DECK 2017 26-MAY 62.00 CALL. If the stock were to rise before expiration you could make a profit of $388. This trade will also get you 3.8% worth of downside protection for your stock.
- Premium up front: $240
- Potential Profit if Stock is Above Strike: $388 for each 100 shares traded
- Downside Protection: 3.8%
You could trade the shares and forget the covered calls. as the stock looks ready to move higher into earnings on May 24.
Happy Trading – Vinny