This Options Trader Provides A Technical View On 3D Systems

3D Systems Corporation DDD has lost more than 66 percent since the start of 2014, and is now trading close to its all-time low. Stock and options trader Gary Kwapik provided some technical analysis on the stock to Benzinga.

“DDD has dropped quite a bit here from last year and has formed a base around the 27 to 33 level. Hovering around the 50-day moving average and a recent breakout from a triangle pattern, the stock may be ready to move up.”

How To Play 3D Systems

Kwapik provides an idea on how to play the current situation. He wrote via email, “option premiums, even though IV due to the earnings binary event is high, are not quite expensive enough today to sell a strangle or iron condor just outside the expected move of roughly 2.5 points. Premiums could change by tomorrow as the earnings are due out Feb 26th before the open so this bears watching.”

He continued, “traders who may want to own stock and be in this sector could sell a put just outside the range around the 27 strike for example and if it does trade down may be put the stock at that price. Small consolation would be to reduce cost basis from the sale of the put and could write covered calls from there to further reduce basis. If the Stock moves to the upside then you just keep the premium and may look down the line to buy on a pullback. Otherwise I would just stand aside in this situation.”

Shares traded recently at $30.78.