Raging Bull (Flag)

Hi Shoppers,

Let’s roll right into it on a Monday!

Rocket Companies (Ticker: RKT) is bull flagging:

A bull flag occurs after a runup, the stock takes a breather and is gathering strength to make the next push higher.

I think RKT can trade back to the $22-$23 area.

I like buying the June 18 19.50-strike calls, which are so slightly in the money, with a 75.33 implied volatility.

There is a huge call skew in RKT, with the out-of-the-money calls trading at much higher implied volatilities.

I will take advantage of that and lower the cost of my trade entry by selling the 29.89-strike calls with an implied vol of 160.51.

All these out-of-the-money calls are so bid up and they are trading. This is due to the fact RKT is hard to borrow and is a meme stock candidate.

I will buy the June 18 19.50-/29.89-strike call spread and pay up to $1.

That is a 10.39-point spread for $1. With the long call $.27 in the money expiring in two weeks, it equals a nice risk/reward trade.

I will begin to take profits $2 and higher and take my losses if the spread trades down to $.70.

Thanks for Reading … See You Next Tuesday!

Licia Leslie

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.