Weekend Trader Series
August 25, 2024
Open Positions Update
There are no portfolio updates this week.The following is this week's recommendation:
Carrier Global (CARR)Place a limit order to buy the Carrier Global (CARR) October 18, 2024 67.50-strike call at a limit price within range of the current market asked price when you place your order. At the close on Friday, August 23, this option was offered at $7.10. CARR closed at $71.25 on Friday, August 23.Do not attempt to enter this position after Monday's close.Please use the following guidelines to manage the position:- Exit the position if the option is at a 100% gain from your entry price.
- If the option has not reached its target profit by 3:00 p.m. Eastern time on Monday, September 16, close the position.
- If there is a change to the above closeout parameters, we will notify you in your regular Sunday evening communication.
Climate energy name Carrier Global (CARR) divested its Commercial and Residential Fire business on Aug. 15, and will be using the $2.2 billion in net proceeds toward share buybacks. Despite its outperformance on the charts, few are taking advantage, with a portion of analyst attention still leaning bearish. In fact, seven covering brokerages sport a tepid "hold" or worse rating on the stock.
After the April through mid-June period, short interest has been building. Specifically, shorts have been in covering mode again, with numbers still double 2022’s short interest bottom. Our recommended October call is cheap, with implied volatility (IV) coming in at a reading of 28%, versus its 63-day historic volatility (HV) reading of 30%. Our recommended October 67.50 call has a leverage ratio of 8.9, and will double on an 11.2% rise in the underlying security.
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