Time To Link Up With LinkedIn (LNKD)
LinkedIn Corporation Credit Spread (NYSE: LNKD)
TheOptionPlayer.com sets up a LinkedIn (LNKD) short-term (8-day) option strategy. Investors could simultaneously:
Sell the November week-two expiration LNKD $210 put for $1.23 (yesterday's closing price)
Buy the $205 put at $.68 (yesterday's close)
The difference between funds received and paid out is a $.55 per share credit which we keep if LinkedIn stock closes above $210 on Friday November 8th, but immediately exit the position if it appears the price will end up lower. If the price gaps lower in the morning open the trade using lower strike prices. See Guidelines page at www.theoptionplayer.com/ for explanation on how trade is set up.
Why we recommend it:
Yesterday LinkedIn (NYSE: LNKD) stock crashed nearly 10% after the company's third quarter earnings announcement. LinkedIn Corporation posted solid numbers, but investors wanted more. Investors were unimpressed with management's future guidance and reacted by bidding the stock price back down to its support level. For investors with a longer term outlook, the price pullback is probably a good opportunity to buy into a company with excellent growth prospects. Investors overacted to LinkedIn's earnings report as revenue growth exceeded analysts' expectations. LinkedIn stock price stabilized today following a Forbes article suggesting that investors "are missing the bigger picture of the company's future.
Notice in the LinkedIn chart below how the current price action is very similar to the beginning of the month. Just like this week, at the beginning of the month the price crashed as investors oversold the stock down to the support level. LinkedIn stock bounced off support as investors bid the shares back toward recent highs. The stock is oversold again and appears the support level held up as investors step in to buy the dip. LinkedIn shares have not been below the price target since the middle of the summer and at the very least there is a high probability that LinkedIn stock will continue to trade above $210 for another week.
52-Week High: $257.56
52-Week Low: $94.75
Average Volume (3 month): 2,219,510
The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.