Alcoa Put Options Pay Off Quickly as Stock Slide Worsens

The 20-day moving average blocked AA shares yet again

Feb 2, 2018 at 11:00 AM
facebook X logo linkedin

Subscribers to our Weekly Options Countdown services just doubled their money on weekly 2/2 Alcoa Corp (NYSE:AA) 55.50-strike puts. We recommended these positions just this past Friday, meaning options traders realized a profit of 100% in just a matter of days. Let's look back at what attracted us to AA in the first place, and how the short trade unfolded.

In our recommendation on Friday, we noted that Alcoa stock had recently gapped lower after a disappointing earnings release. In fact, the security was forming a bear flag pattern on the charts, indicating an extended move downward. Adding to the stock's unfavorable technical setup was the 20-day moving average, which had served as resistance since earnings release.

Considering all of this, it seemed unusual that AA didn't have a single "sell" rating from analysts. This suggested optimism from big investors was still too rosy, and further weakness could be in store following the lackluster quarterly update.

This bullishness was seen from options traders, too. Specifically, call buying had doubled put buying across the major exchanges in the 10 days prior to our recommendation. And staying in the options pits, the equity had a Schaeffer's Volatility Index (SVI) of 37%, that ranked in the low 22nd annual percentile. In other words, data indicated it was a good time to buy near-term options

While Alcoa ticked higher in Monday's session, it once again failed to overcome the 20-day moving average. Two days of heavy selling followed, as some of the optimism we cited began to unwind. Wasting little time, we closed out our position on Wednesday, Jan. 31, allowing traders to double their initial cash outlay.

aa stock price


Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on calls
238.5% GAIN on Oracle calls



Rainmaker Ads CGI