Taser International, Inc.: Set Your Buy Order to “Stun” in TASR

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A stinging, but non-lethal hit in Taser International, Inc. (NASDAQ:TASR) sets Taser stock up at a big discount. For bullish investors, ease fears of additional excessive force on TASR shares using a limited-risk vertical spread.

Taser International, Inc.: Set Your Buy Order to "Stun" in TASR

Last week was a bloody one for Taser bulls. TASR shares were roughed up by 21% following surprise news the New York Police Department had awarded a five-year, $6.4 million body cam contract to privately held competitor Vievu.

No doubt the highly visible contract loss was a blow to Taser in the short-term. For the record though, Taser has grown from a successful, albeit one-trick pony stun gun manufacturer, into a trusted brand synonymous with non-lethal, law enforcement protection systems such as its Axon body cams and Evidence.com platform.

What’s more, there has been some public concern over the quality of Vievu’s product in other cities, as well as how the contract with the NYPD was awarded without a field test. So this may not be a “case closed” situation for Taser.

So while there’s still evidence of blood on the charts and uncertainty in the air, it’s time to take aim for a rebound in TASR.

Taser Stock Chart

100916-tasr-daily-chart
Click to Enlarge
Source: Charts by TradingView

Shares of Taser are currently testing a year-to-date uptrend line. That’s bullish. Taser is also near its 200-day simple moving average and 50% retracement level. Both key support levels are within a couple percent of Friday’s close at $22.43.

In conjunction with fairly climatic selling pressure, it’s our view the volatile pullback in TASR will provide longer-term bulls a nice opportunity to pick up a growth stock at advantageous levels.

Taser Stock Bullish Long Call Spread

With implieds and stock volatility on the upswing and earnings out next month, a bull call vertical spread is an effective way to reduce and limit risk to a known dollar amount, while offering a nice return if Taser shares can rally.

Reviewing the options board, the Taser Nov $23/$25 vertical which trades for 70 cents looks attractive.

The debit works out to having just 3% of the risk associated with a long position in TASR. That’s a nice feature, especially if bears continue to assault shares.

At the same time, if the coast is clear the spread can return nearly 200% with a max profit of $1.30 if Taser is able to climb higher by about 11% and above $25 over the next several weeks into expiration.

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.

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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 and StockTwits.


Article printed from InvestorPlace Media, https://investorplace.com/2016/10/taser-international-inc-tasr-stock/.

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