2015-05-14 Trading The Breakout In Honeywell With Options (HON)
Trading The Breakout In Honeywell With Options (HON)
Notes: On April 17th, the $83B industrial conglomerate reported Q1 EPS of $1.41 vs the Wall Street consensus estimate of $1.39 on revenue of $9.21B vs the $9.50B estimate (down 4.8% year over year). Margins ticked up 220 basis points to 18.7% in one year’s time. The company has a nice dividend just under 2%, but CEO David Cote has said that they plan on spending $10B on mergers & acquisitions by 2018 (M&A has slowed for them lately). With nearly $9B in cash and short-term investments I would suspect that we’ll see a couple of deals later this year (overall M&A market has been hot). HON trades at a P/E ratio of 17.48x (2015 estimates), price to sales ratio of 2.05x, and a price to book ratio of 4.65x. On April 28th, Oppenheimer reiterated their outperform rating and a $117 price target.
Honeywell International (HON) Options Trade Ideas
Buy the (HON) June $105/$110 bull call spread for a $2.05 debit or better
(Buy the June $105 call and sell the June $110 call, all in one trade)
Stop loss- None
1st upside target- $4.00
2nd upside target- $4.95
Buy the (HON) June $105/$110/$115 call butterfly for a $1.65 debit or better
(Buy 1 June $105 call, sell 2 June $110 calls, buy 1 June $115 call, all in one trade)
Stop loss- None
1st upside target- $3.30 or a move to $110 in the stock
2nd upside target- $4.90
ORM Market Commentary (5-10 trades/analysis of stocks, ETFs, and indices per day like in the Free Trade of the Day above) is included in my ORM Equity/Option Trader Subscription Service for $9.99 per month (Join now!).
1 On 1 Options Mentoring: Learn more about my 1 on 1 equity/options mentoring courses that help can you improve your trading odds and risk management skills (courses start as low as $55!).