Wingstop (WING) Rallies on Earnings Forecast, Can It Continue the Momentum?
Wingstop shares have already made an impressive gain in the first few weeks of the new year and several analysts believe there is further upside ahead. CNBC has published an article outlining the factors driving the recent rally while Wingstop CEO Charlie Morrison shares his outlook for growth in a video interview with Jim Cramer.
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Technicals
Wingstop stock closed at a record high in the past week after taking out notable horizontal resistance around $43 which was also last year’s high. The horizontal level is now seen as downside support and several retests of the level following the technical break have been met with buyers.
![WING Graph January 2018 WING Graph January 2018](http://www.terrystips.com/blog/wp-content/uploads/WING-Chart-January-2018.png)
*source Tradingview.com
If you agree there's further upside ahead for Wingstop, consider this trade which is a bet that the stock will continue to advance, or at least not decline very much over the next five weeks.
Buy To Open WING 16Feb18 40 Puts (WING180216P40)
Sell To Open WING 16Feb18 45 Puts (WING180216P45) for a credit of $1.28 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when WING was trading near $45. Unless the stock rallies quickly from here, you should be able to get close to this amount.
If you use our favorite broker for this trade, tastyworks, your commission on this trade will only be $1 per opening contract ($2 per spread) (and there is no commission on closing trades, only the $.10 clearing fee). Each contract would then yield $126 and your broker would charge a $500 maintenance fee, making your investment $374 ($500 – $126). If WING closes at any price above $45 on February 18, both options would expire worthless, and your return on the spread would be 34% (384% annualized).
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Changes to Investor’s Business Daily (IBD) Top 50 This Week:
![IBD Underlying Updates January 11, 2018 IBD Underlying Updates January 11, 2018](http://www.terrystips.com/blog/wp-content/uploads/IBD-Underlying-Updates-January-11-2018.jpg)
We have found that the Investor’s Business Daily Top 50 List has been a reliable source of stocks that are likely to move higher in the short run. Recent additions to the list might be particularly good choices for this strategy, and deletions might be good indicators for exiting a position that you might already have on that stock.
As with all investments, you should only make option trades with money that you can truly afford to lose.
Happy trading,
Terry
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Any questions? I would love to hear from you by email (terry@terrystips.com), or if you would like to talk to our guy Seth, give him a jingle at 800-803-4595 and either ask him your question(s) or give him your thoughts. seth@terrystips.com
You can see every trade made in the actual option portfolios conducted at Terry’s Tips and learn all about the wonderful world of options by subscribing here. Why wait any longer to make this important investment in yourself? I look forward to having you on board, and to prospering with you.
Terry
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