Sell Chemours Calls for 140%, 3-day Gain

By Linda McDonough • February 13, 2017

Sell to close the April 21, 2017 call on The Chemours Company (CC) with a strike price of $29.00 at $4.49 or higher (Symbol (CC170421C29)) for a 140% gain in three short trading days.

Chemours bulls got a nice boost today due to a litigation settlement announced this morning. I still love the stock but know option gains like these don’t come along every day.

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DR083157

02/13/17 ‐ 6:29pm ET February 13, 2017 at 6:29pm ET

Hi Linda, I got kinda of creative today. I had opened a $29-$34 April 21st call option spread on your initial recommendation with a cost of $1.30. 10 contract each side. So today when I saw pop before got your guidance I decided to move some money to sidelines but did it by buying the $34 calls closed and writting open some $31 calls. For that I got $1.50 credit, thus covering my initial investment plus roughly $200 gain. My thougth is I can sit and collect the $2.00 of in the money spread that I now still hold in April. I am not saying this is right thing today but curious your thoughts / feedback if that is a good strategy. Rgds, Doug.

DR083157

02/14/17 ‐ 10:25am ET February 14, 2017 at 10:25am ET

HI Linda, can you give me your thoughts on the trade I articulated. pros/cons, why good, why mistake, etc…trying to learn more on this.

Linda McDonough

02/14/17 ‐ 10:46am ET February 14, 2017 at 10:46am ET

Hello,
The option trades that I recommend are based purely on the expectation that a stock will hit a certain price at a certain date in the future. They are constructed based on fundamental analysis of the company’s financials. While the prices of the options are considered they are not the driving force behind the trade rationales.
There are other option services that focus on the actual option pricing and on generating income by selling options that are expected to expire worthless or buying those that are mispriced. I do not have the option expertise to analyze more complex option trades so really cannot give you an informed opinion on this trade.
Best,
Linda

DR083157

02/14/17 ‐ 11:58am ET February 14, 2017 at 11:58am ET

Thank you for follow up Linda.

Derek: Las Vegas, NV

02/14/17 ‐ 1:10pm ET February 14, 2017 at 1:10pm ET

Sounds like you have a call debit spread. If thats the case then you want to ensure at expiration the stock price remains above $34 and let the contracts get automatically exercised and assigned for the spread width of $5.00 p/contract, which would be a profit of $3.70 p/contract. As long as the stock remains above $34 it would be an excellent trade for a triple digit winner.

Derek

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Linda McDonough

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Linda McDonough is a veteran hedge fund analyst who loves to break down company financial statements and identify market inefficiencies to uncover big opportunities. She believes in a boots-on-the-ground approach that includes surveying customers, interviewing company executives, or doing whatever it takes to see what others don't.

She's now brought her experience as a hedge fund analyst to subscribers of her Profit Catalyst Alert service. Her system identifies small- and mid-cap stocks that are about to move due to catalytic events that few others can identify...until it's too late. These events often times result in massive gains for her followers.