1:10pm (EST)
We have 2 New Trades we are getting into for our Weekly Wrap newsletter.
One stock is at $5.53 and we have a Price Target of $7+ over the next 3-6 months.
We have a long history of recommending favorable biotech stocks and we believe our latest addition could return upwards of 50% from current levels.
Our other New Trade is on a name that is well familiar to the gaming industry but can be volatile. Shares are at $5.67 and we feel a surge past $6 is coming.
NEW TRADES
Buy Alexza Pharmaceuticals (ALXA, $5.53, down $0.03) Covered Call Trade
Sell to OPEN June 6 calls (ALXA140621C00006000, $0.50, flat)
Action: We like the stock straight up but shares have been in a long-term trading range. We can lower our cost basis to $5 by selling the June 6 calls for 50 cents. If we are called-away at $6 in June the trade will make 20%. This would cap our gains but we like the safety. If shares are still under $6 after the options expire, we can sell another call option or wait.
Buy Zynga (ZNGA, $5.63, up $0.39)
Sell to OPEN April 6 calls (ZNGA140419C00006000, $0.30, up $0.15) Covered Call Trade
Action: The company has some new games coming out over the next few months including a slick new version of Zynga Poker. We believe the company is a takeover target based on the potential revenue poker could bring to the company although they don’t plan to monetize anytime soon. We can lower the cost basis to $5.33 by selling the April 6 calls at current levels.