FEATURED CONTENT

Bull or Bear Market… Doesn’t matter

Kyle Dennis’ new, 5 Min Strategy is poised to double Your Money Weekly!

Michael S. made 173% with Dollar Ace. So can you!

 

Off the charts: Applied Optoelectronics Inc. (AAOI)

Jeff BishopJeff Bishop ·

The back story: Applied Optoelectronics Inc. (AAOI) has been a massive momentum play due to a monster run over the last year, flying past $100 before a big 30-plus percent correction that started with an earnings announcement early this month. Despite the recent drop-off, the stock is still up more than 170 percent this year, and 350 percent over the last 12 months. That has made it a darling of the momentum players.

The chart: While all of the momentum shifted downward on AAOI, the stock has been finding a solid support level around $60, building a nice consolidation base.

What I see happening: Applied Optoelectronics is purely a technical play right now; momentum stocks tend to bounce back. This isn’t about fundamentals at all. As long as it doesn’t break the $60 level, I expect we will see a run back to $70.

How I’m playing it: I’ve been buying AAOI Sept. 15 $65 call options over the last week, accumulating 150 contracts. I was down about $10,000 and close to stopping out as the stock was testing support, but I think it is starting to turn and the trade will work out.

With that in mind, I will look to buy more options if it dips from current levels and stays above $60. I will stop out if it falls below $60, and will start taking profits if it hits $65 and runs toward the $70 target.

#-#-#

   Jeff Bishop is lead trader at TopStockPicks.com. He runs short-term trading strategies, primarily using leveraged ETFs.  At the time this was published on RagingBull.com, he held 150 Sept. 15 $65 options on AAOI but had no shares or open orders in it. He is planning to trade his AAOI options – and potentially buy more — as described in this commentary.

You may also like

Exclusive System Tracks Wall St. Insiders

“Dollar Ace Simply Exposes Information That Wall Street Wants To Keep Quiet” Said Kyle Dennis
“One member, Wesley M., has already reported 360%+ gains in just a few short days. Don’t miss this!”
(Reserve Access Now)

“What Recession?!” Jason Bond nets $55,060 in realized profit in One Day

After going 6 for 6 on profitable trades recently, we caught up with Jason to ask how he did it.
Check out Jason’s exclusive interview revealing this tightly guarded strategy. (Watch Now)

RagingBull.com Co-Founder, Jeff Bishop, Launches High Conviction Trade Service

“We listen to our clients and we give them EXACTLY what they want, so we designed a service to deliver 1 trade, 1 time a week, with a 100%+ PROFIT TARGET, directly to your inbox every Monday before the market opens. (Read More)

Be a Better Stock Trader, Starting Today

Get the expert insights, tips and strategies you need to optimize your trading skills and profiles
START NOW