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Trade of the Day: Rambus (RMBS)

RMBS strength early this week seems to confirm my system's analysis


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 Patent licensing company Rambus (RMBS) is showing quite an exuberant start to the week, up 2.02% on Tuesday, and up over 4% since the July 4 holiday. My Power Options system shows quantitative signs that this trend will continue.

RMBS is showing what I call a “reestablished buy” pattern as the stock retraces its way up again after a temporary drop near the end of June which established support around $8. Upside volatility is so strong, in fact, that it makes a great options play.

The best way to play this strength is with RMBS August 9 call options. After entry, take profits if the stock price hits $10.20 or the option price reaches $1.40. Exit if the stock price closes below $8.70 or the option price falls to 40 cents.

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