Strong Support at 245.00
Strong Resistance at 290.00
3x swing between levels in last 7 weeks with 8 trading day average movement from level to level. I will take a long position as follows - here is the risk assessment and stop loss levels.
Initial Investment
100 shares x 246.00/share = $24,600 in open LONG position
| Upside Potential | Downside Potential |
| 100 shares/2 = 50 shares close out 50 shares at 285.00/share = gains of 39.00/share or $1950 profit
SCENARIO I
Remaining 50 shares close out at secondary price target or $300.00 for $54.00/share gains or $2700.00 profit
SCENARIO II
If retraction occurs back toward support levels secondary stop will be places for closing position at 25% retraction of initial run to resistance (39.00/share). Therefore the remainder of the position will be closed out at 275.25/share for gains of $29.25/share or $1462.50 | 100 shares maximum downside exposure to support breakthrough at 238.00/share with minimum volume of 50,000 shares traded on or below this level.
Slippage allowed down to 237.00/share
If maximum downside is achieved total loss is $8.00/share or $800.00 plus transaction fees.
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SUMMARY
Scenario I offers maximum potential gains of ($1950 + $2700) $4650 minus brokerage fees, or 18.9% gross return on investment
Scenario II offers potential gains of ($1950 + $1462.50) $3,412.50 minus brokerage fees, or 13.87% gross return on investment.
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SUMMARY
Therefore, maximum downside potential is $800.00 or ($800 / $24,600) 3.25% of total investment
Average Gain % (18.9 + 13.87 /2) = 16.39% Average Loss % = 3.25%
16.39 / 3.25 = 5.04
Therefore this trade hold 5.04x upside value to downside value, and can be profitable over 5 instances with only a 2/5 success rate. |
$251.57001 (08/12/08)
