Brambles Ltd (BXB)

BXB is currently trading at $12.06.

BXB has been trading in a solid uptrend since the lows in February. They recently rallied hard on the back of a solid report which has since been met with profit taking. BXB returned to the underlying uptrend line and 50 day MA, and bounced higher. Today shows BXB breaking a broad pennant pattern with the next key level of resistance at roughly $12.45. The short term stochastic are oversold, pointing up, an coming out over the oversold area.

bxb chart (1)

To trade this, we would need to be mindful of the slow grind higher. It is hard to suggest a strong directional trade. However, we could look at a Bull Call Spread which not only profits from bullish movement but can also profit from sideward movement or time decay.

Here is the setup:

  • Max Risk: $4,950 (premium paid)
  • Max Reward $2,550

The payoff matrix below shows that we can take comfy profits with a move to the next key resistance at roughly $12.45, making about $1,000 to $1,500 (20-30%) depending on how long it takes to get up there. Otherwise, if the share price falls we could use the recent support at roughly $11.45 and stop out for a similar amount.

bxb matrix (1)

If you would like to learn how and when to use this strategy, and other strategies like it, then please contact us here at TradersCircle on 03 8080 5788. Alternately, you can download a free eBook off our website which runs through advanced strategies.