Trade of the Day: Twenty-First Century Fox, Inc. (FOXA)

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Stocks stumbled a bit early in yesterday’s session after it was reported that President Donald Trump’s meeting with North Korean dictator Kim Jong-un had been canceled, but I don’t think that’s going to mean much for the market in the longer run, and stocks recovered shortly thereafter.

One of the reasons I think we’re seeing sideways action, despite the Federal Open Market Committee (FOMC) announcing that it is considering another rate-hike in June, is that the FOMC was actually quite dovish in its statement this week.

The committee indicated that it is willing to let inflation run ahead of its target, which Wall Street took as a sign that the central bank will slow its pace of rate increases. I’m not entirely convinced, however, and I still think it’s possible that we could see three more rate-hikes this year, but we’ll have to wait and see.

Also on the positive side, the S&P 500 Volatility Index (VIX) is now back below the 13 level, and that tells me that the market is not in any danger of a major decline. It attempted to get above its 200-day moving average over the past two days, but it did not hold there on either occasion, which is a bullish sign.

While the market isn’t giving the all-clear signal just yet, there is one stock in particular that I believe is in a very strong position —  Twenty-First Century Fox, Inc. (NASDAQ:FOXA)

Disney (NYSE:DIS) and Comcast (NASDAQ:CMCSA) are currently in a bidding war for FOXA, and I love to write puts on stocks that are in this position. DIS and FOXA have already agreed on a deal that would value the shares above the $35.50 strike price I’m focused on today, and now CMCSA looks like it is coming in with a better offer, which should be supportive for the stock.

Sell to open the FOXA June 22nd $35.50 put at about $0.30.

For those who may not have used this strategy before, with these naked put writes you want the underlying shares to move higher or at least remain above your strike price through expiration. This would allow you to walk away with no further obligation and full profits.

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Ken Trester is editor of the popular Maximum Options program. Trester has been trading options since the first exchanges opened in 1973 with a winning streak that goes back to 1984 with money-doubling average annual profits since 1990.


Article printed from InvestorPlace Media, https://investorplace.com/2018/05/trade-of-the-day-twenty-first-century-fox-inc-foxa/.

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