31Jul

New Directional Put Play – AKAM

By , July 31st, 2012 | Market News | 0 Comments

Akamai Technologies – AKAM – close: 35.83 change: -.04

Stop Loss: 36.75
Target(s): 32.00
Time Frame: 2-4 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
Akamai reported earnings of 43 cents last week that beat the street and raised guidance. The stock soared +25% on the news. That was on Thursday. Friday’s market short squeeze failed to add any material gains to that spike BUT Monday’s lackluster market also failed to produce a material decline in AKAM.

After a 25% spike well above the consolidation range of the last three months you would expect the spike to fade and profit taking appear. The raised guidance is probably what is holding shares up. However, if the Nasdaq begins to roll over on less than expected help from the ECB/Fed then profit taking could begin with a vengeance.

This is a high risk play. If we do get a dip to trigger our put entry and the market turns around the dip in AKAM could be seen as a buying opportunity.

I am looking for AKAM to retrace about half of its gains from last week if profit taking appears.

I am recommending we buy the Sept $34 put in anticipation of a possible decline to the June support at $32.

Trigger: Enter only with an AKAM trade at $34.85

 

- Suggested Positions -

Position: Long Sept $34 PUT (AKAM1222U34), currently $1.19 

Chart of AKAM

 

Entry on July xx at $ xx.xx
Average Daily Volume = 3.3 million
Listed on July 30, 2012

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