We’ve opened a new bullish trade on Under Armour (UA). As we look at entering new bullish trades after the dramatic correction the U.S. stock market has experienced recently, we are focusing on those stocks that were doing well before the correction and seem to have simply been caught in the downdraft of the market pullback. Under Armour is one of those stocks.
After the company’s July earnings announcement, Under Armour surged more than 10% in two weeks as investors adjusted to the fantastic news that UA’s global revenue increased by 93%. Under Armour continues to expand internationally, footwear revenue in the white-hot sneaker market grew by 40% and management sees higher revenue and earnings in the future. UA’s expanded agreement with the NBA and stars like Stephen Curry will only help the company grow.
While Under Armour did pull back 20% during the downturn, it is bouncing back quickly, and we anticipate that it will climb back above $100 as investors look for winning stocks they can jump into.
‘Buy to open’ the Under Armour October 100 Calls (UA151016C00100000) for a maximum price of $3.20.
We also still recommend holding the Twitter (TWTR) options, the TWTR October 24 Puts, we recommended last week but we will be watching them closely. While Twitter has rebounded with the rest of the stocks on Wall Street, it is still a long way away from establishing a new short-term high. The resistance level at $30 — which used to be support in May 2014 — is solid, and we expect the stock to turn around at this point (forming a lower high) and move back down toward $24.
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