MO shares were trading near several layers of support
Subscribers to Schaeffer's
Players service recently enjoyed a 300% gain with
Altria Group Inc (NYSE:MO) weekly 6/23 71-strike calls. Below, we'll break down how we located MO stock, and how the options trade unfolded.
We initially recommended Atria stock back on May 22. The shares had retraced their November-to-May rally, and were trading back at the 38.2%-50% retracement zone, also home to their 2016 highs. With the stock breaking away from a previous support level at the 20-day moving average, it looked ready to add to its 5% year-to-date lead.
Plus, the stock had plenty of upside potential, from a contrarian perspective. For starters, the majority of analysts covering the stock had "hold" or "strong sell" ratings. This pessimism was also seen among options traders, with MO shares sporting a Schaeffer's put/call open interest ratio (SOIR) 1.16, which was only 4 percentage points from a 12-month high. We suspected an unwinding of some of this pessimism could help Altria on the charts.
MO shares began to climb immediately after our trade, allowing us to close half the position on May 30. After a brief period of consolidation, Altria stock made another upside push to record-high territory, and we finally closed our bullish position on June 20, allowing options traders to quadruple their money.
