Call Traders Scored Big Profit With Credit Card Stock

Traders were able to profit at an affordable entry price, too

Deputy Editor
Mar 7, 2024 at 2:23 PM
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Schaeffer's Weekend Trader subscribers doubled their money with our American Express Company (NYSE:AXP) April 200 call recommendation in just over a month. Now that they've pocketed their profits, it seems like a good idea to review what went into this winning pick.

At the time of our recommendation on Feb. 4, AXP had just completed a 7.1% gap higher following the credit card company's Jan. 26 earnings report. That post-earnings jump helped the equity clear and hold above its previous all-time high of $199.55.

We also noted massive upgrade potential and a chance for short covering. In addition, we highlighted the negative put/call volume ratio that could have unwound given the stock's technical outperformance.

Premiums were affordable, too, in a post-earnings volatility crush. AXP’s implied volatility (IV) was in line with its 63-day historical volatility (HV). So, not only did traders double their money, they did so for a bargain.

American Express stock turned in just eight losing sessions since our recommendation. What's more, AXP scored seven-straight record highs beginning on Feb. 22, and earlier today hit another peak of $224.69 following yesterday's news that the company raised dividends by 17% to 70 cents per share. We recommended exiting the position today, allowing our subscribers to collect a 100% profit.

AXP Chart March 72024

 

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