3D Systems Corporation (DDD) Stock Can Help You Print 900% Profits

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It has been a long while since 3D Systems Corporation (NSYE:DDD) has printed money for bullish investors. But it’s time to take another look at DDD stock as a second act in the making that’s being manufactured right here, right now.

Let me explain.

For long-term holders of DDD stock, it has been a tough couple of years. It has likely been all the more painful given the overall strong performance of risk assets and major benchmarks printing all-time highs over the same period.

The good news is a second act for DDD is looking good with less chance of disappointing investors and Wall Street both off and on the price chart.

The fact of the matter is 3D Systems isn’t the growth stock darling it was back in 2012 and 2013 when shares rallied roughly 1000% over a feverish two-year period. Actually, it’s a good deal less at $18, a median price target of just $15, four sell ratings and 58% maintaining hold recommendations. Believe it or not though, that’s really good news!

Bottom line, over the last couple years as DDD stock has endured being one of Wall Street’s proverbial whipping boys, a more mature and focused company has emerged. Combined with easier-to-beat expectations, profits beginning to trickle in and a market area with plenty of secular growth opportunities — there’s a lot to like about 3D Systems moving smartly forward from here.

DDD Stock Monthly Price Chart

Source: Charts by TradingView

Looking at the monthly chart of DDD stock, there’s also a lot to like these days. As mentioned — much to the chagrin of shareholders — shares have come a long ways down from its rocket-like all-time-highs back in January 2014.

The good news is during that gravitational pull lower, DDD stock has essentially gone back to where it started prior to its go-go-growth story. And for investors willing to give 3D Systems a serious second look, shares are just now breaking out of a critical monthly chart triangle base.

One caveat to DDD’s emerging uptrend is the daily chart. Following a move in excess of 25% from last Thursday’s earnings reaction low, shares do appear extended and overbought. As such, a pullback might be anticipated.

A correction of 10% to 12% to challenge prior resistance near $17 could occur over the next several sessions. However, given the strength of the breakout and without guarantees from the price chart, some sort of assurance using the options market to participate smartly as a bull makes sense.

3D Systems Modified Fence Strategy

 Given the overall bullish view for DDD stock, I like the idea of approaching shares with a modified fence strategy.

Reviewing the options with shares at $19, one such package can be constructed buying the Aug $23/$21 call vertical and selling the Aug $17/$16 put spread for a debit of 20 cents or better.

What’s this combination entitle the DDD stock investor too? On the downside, the 20 cents of premium paid and bull put spread amounts to buying shares at $17.20 and near key technical support described above. Nice, right?

Perhaps even more attractive, risk is limited to the $1.00 distance between the put strikes plus the debit. Thus, should DDD stock trade aggressively lower and below the vertical, buying shares through assignment or a swap adjustment in the open market for much cheaper than even $17.20 is possible.

And what about the upside? If left unadjusted and if 3D Systems obliges, this spread has the opportunity to profit handsomely. Should shares rally above the wider bull call spread, ultimately profits of $1.80, or a return of 900%, is possible if DDD is printing above $23 at August 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.

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/2017/05/3d-systems-corporation-ddd-stock-print-profits/.

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