BWLD Stock: Try This Trade for Lip-Smackin’ Profits

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A volatility vortex has descended on Wall Street, and it’s whipping stocks around at breakneck speed.

But not all equities are suffering during the storm. Some stalwarts like Buffalo Wild Wings (BWLD) have sidestepped the drama altogether.

It’s the ultimate sign of relative strength, really. With the S&P 500 in the throes of a 10% correction BWLD stock is perched near all-time highs. Apparently whatever is ailing U.S. stocks has little to do with chicken wing consumption.

The price trend for BWLD is solid. It’s one of the few stocks still sitting atop all its major moving averages. After soaring on July’s earnings announcement, Buffalo Wild Wings shares have spent the past six weeks digesting gains. The digestion has taken on the form of a classic base which may well serve as a launchpad for the stock’s next ascent.

Though BWLD did take a dive last Monday during the broad market crash, it recovered rapidly. Since then, a higher pivot low has formed showing demand for the stock is still strong.

BWLD stock
Click to Enlarge
Source: OptionsAnalytix

The $200 zone has put a lid on BWLD stock for now, but I suspect a breakout is looming. A successful breach of this resistance level should kick off another rally.

BWLD Call Spreads Look Tasty

Traders boasting smaller accounts need not be deterred by BWLD stock’s higher price tag. The options market offers cheap trades aplenty to exploit the coming breakout bid.

Be forewarned: BWLD options aren’t the most liquid. Bid-ask spreads are wider than preferred, so limit orders are a must.

Buy the Dec $200/$210 call spread for $4. The vertical spread is constructed by buying to open the Dec $200 call and simultaneously selling to open the Dec $210 call.

The risk is limited to the initial $4. debit and will be lost if BWLD sits below $200 at expiration.

The reward is limited to the spread between strikes minus the net debit, or $6, and will be captured if BWLD can ascend past $210 by expiration.

By using December options, you give yourself plenty of time for the stock to make the journey.

As of this writing, Tyler Craig did not hold a position in any of the aforementioned securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2015/09/bwld-stock-trade/.

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