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Profit Booster
Make Money 3 Ways from Great Growth Stocks

Cabot Profit Booster 102

Big data is big and growing bigger. The market is forecast to reach $103 billion by 2022, with every person generating 1.7 megabytes of data every second, with internet users as a whole expected to generate some 2.5 quintillion bytes of data each day.

Cabot Profit Booster 102

The Stock — Splunk (SPLK)

Big data is big and growing bigger. The market is forecast to reach $103 billion by 2022, with every person generating 1.7 megabytes of data every second, with internet users as a whole expected to generate some 2.5 quintillion bytes of data each day. Suffice it to say, all this data has to be corralled and massaged into something useful, which is where Splunk makes its hay.

Technical Analysis

splk

SPLK has had a good story and solid growth for a while, but the stock has been dormant—it reached 118 in April 2018 and was still at that same level early last month. But it’s looking like SPLK is now getting going, with two big-volume buying weeks following earnings to minor new highs. We like the recent rest in the upper 140s and are OK getting some shares around here. Stop – 133.5

The Covered Call Trade

Buy Splunk (SPLK) Stock at 150, Sell February 155 Calls (exp. 2/21/2020) for $6, or a Net Price of $144 or less

Static Return: $600 per covered call (4.16%)

Breakeven: 144

Covered Call Return (if assigned): $1,100 per covered call (7.63%)

Please note, the stock and options prices will be moving throughout the day, so these prices are simply an approximation of prices that you should be able to achieve.

However, the important component of this equation is that the stock price paid, minus the premium received via the call sale, equals the Net Price, or $144 or less. (In this case 150 minus 6 = 144. Or another example is you could pay 151 for the stock and sell the call for 7, which also equals 144)

For every 100 shares of stock you buy, you can sell 1 call. For every 200 shares of stock you buy, you can sell 2 calls. And so on …

Open Positions

open trades