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!