September 11, 2018

Bullish On Check Point Software? Check!

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.

China will ask the World Trade Organization to impose sanctions on the U.S. next week for non-compliance related to a ruling regarding U.S. dumping duties. The 2017 WTO ruling was related to several industries ranging from machinery to metals to light industry for a total annual export value of up to $8.4B.*Source:  Seeking Alpha

Let’s consider Check Point Software Technologies (Ticker: CHKP):

The VantagePoint platform recently indicated continued upside momentum.

Using the predictive indicators embedded within the VantagePoint platform and its predictive AI technology, we will point out three significant things. We have a bullish crossover indicated by the blue predictive indicator line crossing above the black simple moving average on September 10th.  We can combine that with the VantagePoint propriety neural index indicator moving from the RED to the STACKED GREEN on the same day.  This indicator measures strength and weakness for a 48-hour period, in this case, strong bullishness.  The move to the STACKED GREEN position further makes the case for a potential bullish scenario. We also have the predicted high and low above yesterday’s actual high and low indicating further strength.  I want to play the VP continued bullish indication.

Strategy Discussion

If you are strictly a stock trader, simply buying CHKP in the $117.25 area is a prudent move.  You are anticipating a move to the upside.  It is always a good idea to enter a sell-stop order to mitigate potential losses.  Placing that sell-stop in the $115.25 area will achieve that goal.

For active traders with a shorter investment time horizon, you can consider a setup utilizing options. Given the market conditions outlined above, taking an active, premium debit approach may be the best path to success.

Because of the reasons given above, the purchase of a debit call spread may be one way to approach this situation.  You will first want to calculate your target strike.  In order to do this, you will need three pieces of data:  current price, expiration date and the implied volatility associated with that expiration date.  For CHKP, that yields a targeted strike of ~$125.00.  You may want to consider the CHKP October 19th regular monthly expiration 120/125 call spread, buying it for $1.25.  The most you can lose is the premium paid and the most you can gain is the width of the spread less any premium paid.  Max risk = $1.25 and max reward = $3.75

This means that you are getting odds of 3.00:1.

Given the trading and market environment outlined above, a trader must evaluate whether this reward/risk ratio is appropriate for his/her risk tolerance.

If you would like to learn more about the VantagePoint platform and take advantage of the exclusive offer that our clients enjoy, please visit:

https://discover.vantagepointsoftware.com/prosper-demo/

about the author:

Mike Shorr

Since 1994, Michael has been an on-the-floor market maker, Vice-President of Interest Rate Derivatives for Knight Financial Products and Director of Education and Options Instructor at Trading Advantage. He makes the oftentimes complex world of options and trading accessible to the novice and advanced trader alike. Michael has a Bachelor of Science degree in Statistics and Finance from the University of Illinois Champaign-Urbana. He presently is Director, Trader Education at ProsperTradingAcademy.

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