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Options Traders Triple Their Money on Stanley Black & Decker

Our recommended SWK call option more than tripled in value

Jul 21, 2017 at 2:59 PM
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Subscribers to Schaeffer's PowerTrend service recently notched a 208% gain, thanks to Stanley Black & Decker, Inc. (NYSE:SWK) July 120-strike calls. Below, we'll break down why we were bullish on SWK, and how the options trade unfolded. 

Back in early February when we initiated our bullish position, Stanley Black & Decker stock was trading around $123.84, and just off an all-time high. The shares had recently bounced off long-term support from their 200-day moving average, as well as the $120 level, and were looking to take out former resistance at $125 -- an area that was briefly toppled after SWK's January earnings report.

Despite SWK's technical prowess, the majority of analysts offered up tepid "hold" opinions. We felt that upgrades could fuel SWK stock even higher. Further, short interest on Stanley Black & Decker was on the rise, signaling lots of pessimism -- and possible sideline cash to push SWK into the black. And fundamentally, we noted that Stanley Black & Decker had been making acquisitions, which we felt could start to pay off.

SWK didn't disappoint, extending its uptrend following our recommendation, and hitting new record highs before the end of the month. By the time we recommended subscribers take some profits and close 50% of their SWK calls in mid-to-late June, Stanley Black & Decker shares had rallied about 13.6%. Then, with July options expiring today, we recommended subscribers close out the remaining 50% of their SWK calls, now asked at $26.80 -- more than three times our maximum entry price of $8.60.


stanley black and decker swk stock chart


 

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