VantagePoint Trading Software is a forecasting tool that uses both end of day data and artificial intelligence to provide traders a forecast of market movement. These forecasts are 1-3 days in advance and help traders improve their timing on making trades and maximizing profit potential. The artificial intelligence software forecasts market movement for stocks, futures, Forex and ETFs. F5 Networks, FFIV stock, is in focus today…
This journal entry looks at the recent market movements of F5 Networks NASDAQ: FFIV
VantagePoint Trading Journal FFIV Stock UPDATE
You may recall that we identified a possible weakness in F5 Networks (FFIV) back on 1/26/18. We identified a potential approach to take advantage of this weakness by highlighting a credit call spread sale. Specifically, we looked at the February 9th weekly expiration 136/138 call spread collecting $1.05 in premium. It was not the cleanest of paths to success, but ultimately, we took advantage of the positive decay and we were able to close the opportunity at a debit of $0.75 with the stock trading $136.40 on the day of expiration. Here’s what the chart looked like on expiration:
VantagePoint Trading Journal FFIV Stock
The market was awaiting the release of this morning’s first estimate of Q4 2017 GDP. If it can post another mark above 3% is will the first time since 2005 it has done this three quarters in a row. Until then, the market seems to be taking a bit of a breather and hovering towards all-time highs.
We can use the artificial intelligence forecasting software VantagePoint to analyze markets at all levels. Whether you are looking for individual stocks, futures or ETFs, stock sector rotations, or broad indexes like the S&P, Dow, and the Russell, VantagePoint can easily compile that data. Today, we will focus our efforts on F5 Networks, (NASDAQ: FFIV). Let’s look at the chart:
Using the predictive indicators embedded within the VantagePoint platform and its predictive AI technology, we will point out two significant things. We have a bearish crossover indicated by the blue predictive indicator line crossing below the black, simple 10-day moving average on 1/24/18. We can combine that with the VantagePoint propriety neural index indicator moving from the one (1) to the zero (0) position. This indicator measures strength and weakness for a 48-hour period. The move to the zero (0) position indicates weakness and further makes the case for a potential bearish scenario. That’s why one could consider entertaining a setup to the downside or at the very least, a move not to the upside.
If a trader traded straight stocks, simply selling FFIV stock in the $135.00 area could prove to be prudent. You are anticipating a move to the downside. It’s also a conservative way to enter FFIV without the limitation of time associated with other strategies. It might be wise to also place a buy-stop order in the $140.00 area to mitigate potential losses.
For more active traders with a shorter investment time horizon, you can consider a setup utilizing options. Given the market conditions, taking a passive, premium credit approach may be the best path to success.
The sale of a credit call spread may be one way to approach this situation. It is optimal to collect the most premium in an options set up like this. Selling a strike close to at-the-money and buying a further out call as protection would be most prudent. Consider the sale of the Weekly February 9th 136/138 call spread collecting $1.05. This will yield a risk to reward ratio of laying odds of 0.90:1. This is calculated by taking the width of the spread less any premium collected and dividing by the premium collected.
Given the trading and market environment outlined above, a trader must evaluate whether this reward/risk ratio is appropriate for his/her risk tolerance.