A confluence of events over the last couple months has caused some bodily harm to Taser stock. But far from being DOA, Taser International (TASR) is offering bulls the opportunity to position for growth at a discount.
And by using a limited risk Taser stock long call strategy, traders can keep their portfolios safely in a locked position through TASR’s upcoming earnings report.
It’s been a bit of a bloody week technically for Taser stock, with shares off 12% by midday trading on Thursday. The bearishness came after the law enforcement security and protection device manufacturer fell victim to competition news from Motorola Solutions (MSI).
Motorola Solutions, an emergency device communications specialist, announced that it’s taking aim at Taser’s body camera, Axon with its three-in-one system, CommandCentral Vault. But don’t write off Taser stock just yet.
Taser’s Axon platform has enjoyed first-mover advantage in a growing market niche spurred along by some unfortunate and high-profile conflicts between authorities and civilians. Evidence-gathering equipment like Taser’s Axon helps protect the rights of civilians, as well as the public servants that wear the cameras for better transparency.
Axon has been a boon for Taser stock, and as one might imagine, the company isn’t just waiting to have its market share hijacked by the competition without putting up a fight.
On Wednesday Taser announced that it is expanding the Axon platform with the release of the Axon Interview — a dedicated interview room appliance to allow for a more seamless visual and audio experience. It’s another reason to reconsider Taser stock.
The monthly view of Taser stock shows that 2015 had the makings of a terrific year for bulls. During the first half of the year, shares of TASR were up in the neighborhood of 35%.
Subsequently, reports of potential competition from Panasonic and GoPro (GPRO), weak guidance and a much more hostile market environment have all conspired to beat TASR stock down by about 18% on the year.
The good news is that shares of TASR are now at a heavy discount to where they once were — and competition, while a threat, shouldn’t be treated as a death sentence for Taser stock. No doubt, damage to the daily chart trend has been done. But, longer-term, value appears approachable on the Taser stock chart.
Since forging its all-time-highs of $35.95 in June, Taser stock has pulled back by a near picture perfect 50%. While the correction is deep, it has held (loosely) a couple key Fibonacci retracement levels from its 2008 and 2014 lows and its prior 10-year high. That’s good news.
Taser stock has also formed a massive hammer low on the monthly perspective. The higher low pivot, should it hold, would work to validate Taser’s monthly uptrend as still being intact.
Taser Stock Bullish Long Call Spread
Implieds are on the upswing in Taser stock, and with earnings a couple weeks out on Nov. 3, a vertical spread that allows bulls to diffuse undesirable risk and maintain a safety lock makes very practical sense.
Checking the board, one vertical which is attractive is the Taser stock November $22/$24 bull call spread for 80 cents or cheaper.
With shares of TASR around $21.80, the spread’s breakeven is 4.5% higher on expiration, but would offer a modest profit if Taser stock were to snap back to that level prior to the third Friday in November.
Taser stock’s recent highs approached $26.50. Further, with a history for volatile earnings moves, getting to breakeven and even maximizing the spread’s $1.20 profit potential above $24 wouldn’t be terribly difficult on the heels of a well-received report.
Short interest of around 33% might also assist in a potential bid in Taser stock. On the flip side, that same high level of convinced bears is yet another factor supporting the use of a Taser stock vertical spread to help prevent potential unwanted and harmful assaults on the overall portfolio.
Disclosure: Investment accounts under Christopher Tyler’s management do not currently own positions in any of the securities or their derivatives mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT
