3D Systems Corporation (NSYE:DDD) has been printing money for bulls the past couple weeks. And in our estimation, that trend is ready to manufacture additional and safer profits for traders using the DDD options market for positioning. Let me explain.

It wasn’t long ago — in fact, just two weeks back — when I suggested investors take a fresh look at 3D Systems. DDD stock appeared to be coming back for a second act both off and on the price chart following its early May earnings report.

K-A-C-H-I-N-G!!! Share of 3D Systems are up 18% since our article at InvestorPlace — and more than 40% from some initial observations discussed on my Twitter feed. And guess what, I’ll say it again, this trend could be just starting to hit its stride again.

Bottom line, following a couple punishing years both off and on the price chart, a more mature and focused 3D Systems is re-emerging with profits trickling in; and as an established company well-positioned for secular growth in this still very young and important market.

Further, coupled with short interest of 20% and a mostly bearish analyst narrative which could act as backpedaling support for higher prices; DDD has some fuel to push shares higher.

As well, with a bit of technical backing and filling this past week, 3D Systems should get the attention of momentum traders eyeing entries into DDD stock.

DDD Stock Daily Price Chart

Looking at the daily chart of DDD, there’s a lot to like these days. Following 3D Systems’ earnings-driven breakout from a massive yearlong triangle pattern, shares have consolidated and diffused some overbought conditions spawned by an aggressive rally of seven straight sessions.

The current pullback pattern in 3D Systems is just four days in length, with Monday’s session offering traders an inside candlestick. It’s a fairly common pattern in momentum stocks which require shorter, first-stage bases after large breakout moves before moving even higher.

In these type of situations — among which I see DDD stock as a card-carrying member — the crowd continues to wait on the sidelines insisting on lower prices or remains disbelieving of the move altogether — only to watch the stock as it makes another forceful leg up in price.

Of course, without any guarantees from the DDD stock chart and much like our last analysis, it’s up to the options market in 3D Systems to help with assuring the trader can position smartly and more safely for both the anticipated and unanticipated.

DDD Stock Modified Fence Strategy

In my last discussion of 3D Systems, I proffered a modified fence strategy. The Aug $23/$21 bull call spread packaged with the Aug $17/$16 bull put spread was priced for a debit of 20 cents with DDD at $19.

The combination looked like an attractive, limited-risk way to position as shares broke above triangle resistance. It made sense for those willing to buy on a deeper pullback, but also wanting to be long DDD if shares took off — which they did. Currently, the strategy is priced at $1.10, resulting in a paper profit of 90 cents thus far with DDD shares at $22.41.

Reviewing Monday’s closing options board in 3D Systems, I still see the value in this type position but believe a shorter-term package and different strikes is better suited to the current momentum-style price pattern in DDD.

One modified fence combination in 3D Systems which looks attractive is buying the Weeklys 23 June $ 24.50/$26 bull call spread and selling the 23 June $21.50/$20.50 bull put spread for even money or better.

What does this entitle the DDD stock investor too? On the downside, the bull put spread means the trader should be receptive to buying shares at $21.50 or potentially a larger discount if 3D Systems crashed below the sold $20.50 put strike.

Currently the assignment price matches Monday’s inside candlestick low in DDD. That’s nice to think about. Ultimately though, and even nicer, if the technical setup failed, risk is always contained to $1 and the distance between the strikes.

Between $21.50 and $24.50, at expiration this strategy expires worthless. However, given it doesn’t cost the trader money to establish and that we’re looking for momentum from DDD, that’s not a terrible trade-off to consider.

As well, if DDD rallies sooner, rather than later in the life of the spread, this combo can increase in value below $24.50 due to impact of being long deltas.

And what about more meaningful profits? Above $24.50 the trader has a free bull call spread in inventory with a max payout of $1.50 if DDD begins to turn on those printing presses once more.

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.