Long Term Breakout in FLR

[Steven Place]

We’ve got a massive breakout pattern setting up in FLR

The most recent dip could be classified as a failed breakdown, as the support at 65 was lost but then the stock got back above it. That’s the pivot level to watch.

FLR is kind of a boring stock, and it is right into resistance so a pullback is possible (even though the chart could still be very constructive).

I think there’s a great play here using January in-the-money calls and selling an October out-the-money call to help finance it. Overall the risk looks very similar to a covered call:

Buy Jan 2014 65 call

Sell Oct 70 Call

If FLR can’t hold that 65 level then an exit would be prudent.

Now here is where this kind of trade gets fun. If FLR goes higher but stays right around 70, then you can buy to close the 70 calls and then sell to open a Nov call which further reduces your basis.

 

 

[Steven Place]

FLR caught a large gap higher on news of a new DOE contract. It’s now overbought, and our risk structure currently has us setup for diminishing returns if the stock keeps running.

Now is a great time to close out the trade and stalk for a new long on any retracements back to 70.

[Author]

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