Oh, I agree... the option I mention is a complete long shot... it wouldn't be trading for a penny otherwise. But in a perfect storm, that's how you make a killing. A buyout rumor today or tomorrow is all it would take.
A lot of the call options with strike prices ranging from 28.50 to as high as 31.50 presented some amazing entry points today when CLF was trading at it's low of around 27.40. The returns on a 10% gain in the stock over the next two days would yield returns in excess of 1,000% on some options and a 20% gain in the stock would make your head spin. Just think... a 20% move to the upside from 27.50 would mean the stock would jump to $33. The 31.50 calls expiring this Friday were trading at .01 ON THE ASK meaning you stood to make roughly 15,000%! Don't think these numbers are lost on the big boys of Wall Street. Remember, we're only 25% into the breakout phase of the cup-and-handle-and-breakout classic chart formation (coupled with a golden cross this week, mind you). It's not unreasonable to have a 5-10% pop tomorrow followed by another 5-10% on Friday... these pops happen every day on different stocks. The key is to catch the options when there's not a lot of volatility premium built in and that's usually done when the stock is trending in the direction opposite your desired position, the way CLF did today for a short period of time. We are trading in overbought territory with the 14 day RSI still above 70 at 71.91 but off the highs of about 79 a day or two ago. This is normal in a breakout period and trades can continue to occur and climb even in overbought territory as it's easier to move a stock to higher highs as long as the RSI stays above 70 than it would be once a reversal occurred and the RSI started trending downward. The last time the RSI was above 70 was in August and lasted for a few days before the stock sold off. The difference this time is the golden cross (crossing of the 50 and 200 day moving averages) and the completion of the cup and handle... both bullish indicators not present before. Remember the run up from 20 to 25 is not part of the 10 point expected breakout (the depth of the cup)... the breakout started at the 25 level (the top of the cup).
Sentiment: Strong Buy
Then I suggest you keep throwing your money at it while the big boys laugh all the way to the bank. This thing tried to retest it's high after a significant drop and was unable to break through the resistance. The momentum is coming to an end and the 50 day moving average has already reversed course and is trending downward. Gravity is about to take over but you're too emotionally attached and cant see the forest for the trees.
The cup and handle pattern has been fulfilled and we are currently in the breakout portion of the chart. The golden cross happened earlier this week. We are about to retrace the drop from 35 to 28 which happened back around February. Incidentally, the depth of the cup (from $25 to $15) is typically the same as the breakout gain from the cup rim to the breakout resistance level ($25 to $35) which is funny because the resistance level also corresponds to the support breakdown level of $35. I expect a 25% pop in the next three days with heavy short covering driving the price to the $35 level.
Sentiment: Strong Buy
we are currently at $226.27
The recent round of changes to email aren't being well received by loyal Yahoo members and if they aren't corrected soon, I expect a lot of negative bias will start gaining momentum. I think some put options are in order.