As income investors, we seek to create consistent monthly income by selling options to collect monthly premiums. This has been successful for our investors for years. Option selling offers another method to diversify investing strategies beyond traditional dividend investing. We have combined technical stock events with our strategy to identify high returns option selling opportunities. This income trade will generate a return of more than 160% annualized.
Stock: Intellia Therapeutics (NTLA), a gene editing company, focuses on the development of therapeutics utilizing a biological tool known as the CRISPR/Cas9 system. The company develops in vivo programs focused on liver diseases, including transthyretin amyloidosis, alpha-1 antitrypsin deficiency, hepatitis B virus, and inborn errors of metabolism programs.
Chart: We have detected a “Head and Shoulders Bottom” chart pattern formed on Intellia Therapeutics Inc (NTLA on NASDAQ). This bullish signal indicates that the price may rise from the close of 21.51 to the range of 25.50 – 26.50. The pattern formed over 22 days which is roughly the period of time in which the target price range may be achieved. Intellia Therapeutics Inc has a current support price of 19.18 and a resistance level of 22.12.
Strategy: We have an opportunity to sell options for income with NTLA as the stock should trade higher in the coming weeks. I recommend to place your trade and exit when you have locked in profits due to the stock price moving higher. Our goal here is to make income short term so we can exit and compound capital into another trade.
For medium risk option trade, look to sell a January 2018 22.5 PUT for about $1.50. This creates a return of 7.1% to expiration in 16 days or greater than 162% annualized.
For a conservative trade, you can setup a covered call trade. You can purchase 100 shares of NTLA and sell a January 22.5 CALL option for about $1.25 for an assigned return of 7.3% in 16 days for a 166% annualized return.
We continue to identify winning option trades to generate income and to exit early as the stock bullish patterns moves prices higher.
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