Optioneering Newsletter

October 30, 2016

The Dow Monthly

The outlook for the DOW remains the same. The monthly trend is up and
the long-term outlook is bullish. However, there are always corrections
along the way. The little pullback that has occurred recently is expected to
yield to a further advance.
The first profit opportunity we will review this week is in ADSK, or Autodesk,
Inc. Autodesk is an American multinational software corporation that makes
software for the architecture, engineering, construction, manufacturing,
media, and entertainment industries.

ADSK Monthly

The monthly chart shows that the overall trend I ADSK has been up since
2009. ADSK hit a new record high on October 6th. New record highs are
bullish.
 ADSK Daily

The daily chart shows that ADSK has been in a strong bull trend since the
June low. A higher low bottom appears to be in place at this month’s low.
There are no signs of a top.

We are going to review a Call Debit spread for ADSK.

Traders who want more leverage can buy ADSK calls. ADSK has options
expiring in November, December, January, April, January 2018, and
January 2019.
 Buy to Open ADSK December 16th expiration 57.50-strike Call
Sell to Open ADSK December 16th expiration 67.50-strike Call

We can see from the Call Option Spread Analysis Calculator that if the
ADSK stock price declines by -5%, stays where it is, or increases in price
when the options expire, the spread will make a 27.4%, or $215 profit. If
ADSK is down -7.5% when the options expire, the spread will make 14.3%
or $112.

The next profit opportunity we will consider this week is in STMP, or

Stamps.com Inc. Stamps.com provides internet-based mailing and shipping
services that allow small businesses, online retailers, and other
organizations to print official United States Postal Service stamps and
shipping labels with their computer, printer and an Internet connection.
 STMP Monthly

The monthly chart shows that STMP was extremely bullish from the 2014
low until the 2015 high. Trading since the summer low suggests that the
deep pullback could be over and the uptrend could be resuming.
 STMP Daily

The daily chart shows that STMP was very bullish from July low to the
September high. Friday’s bullish trading supports the outlook that the
second higher low bottom since the September low could be in place at this
month’s low. Higher lows point to higher highs. The next upside target is
above the September high.

We are going to review a call debit spread for STMP.

Traders who want to employ a more leveraged approach can buy STMP
calls. STMP has options expiring every week until December 16th. After
that, STMP has options expiring in February, May, January 2018, and
January 2019.
 Buy to Open STMP December 16th expiration 75-Strike Call
Sell to Open STMP December 16th expiration 90-Strike Call

We can see from the Call Option Spread Analysis Calculator that if the
STMP stock price declines by -2.5%, stays the same as it is now, or
increases in price at all at when the options expire, the spread will show a
profit of 38.9% or $420. If the STMP stock price is down -5% at expiration,
the spread will make a 34.8%, or $376 profit. If STMP is down
-7.5% when the options expire, the spread will make 13% or $140.

The next profit opportunity we will review is in MLM, or Martin Marietta

Materials. Martin Marietta is a leading supplier of aggregates and heavy
building materials, with operations spanning 36 states, Canada, and the
Caribbean. In particular, Martin Marietta supplies the resources for roads,
sidewalks and foundations.
 MLM Monthly

The monthly chart for MLM has a bullish pattern of higher highs and higher
lows. This month’s bullish trading suggests that the three-month pullback
could be over and the uptrend could be resuming.
 MLM Daily

The daily chart shows that MLM was very bullish from the February low to
the July high. Like the monthly, recent trading on the daily chart also
suggests that the pullback could be over and the uptrend could be
resuming.

We are going to review a Call Debit Spread for MLM.

Traders who want a more leveraged approach could consider buying MLM
calls. MLM has options expiring in November, December, January, April,
and January 2018.
 Buy to Open MLM January 20th 155-Strike Call
Sell to Open MLM January 20th 170-Strike Call

We can see from the call option spread analysis calculator that if the MLM
stock price decreases -5%, stays where it is, or increases at all in price at
expiration, the spread will make a profit of 28.2% or $330. If MLM is down
-7.5% when the options expire, the profit will be 8.7% or $102.

The last profit opportunity we will review is in NSP, or Insperity, Inc.

Insperity provides human resources services to small and medium-sized
businesses. In 2011, the company changed its name from Administaff to
Insperity to avoid the perception that it was in the temporary staffing
business
 NSP Weekly

The weekly chart shows that NSP was very bullish from the 2014 low until
the 2015 high. Then, after a dip and a long period of sideways trading, NSP
made an even stronger bull move this year. Recent trading suggests that
the pullback from this year’s high is over and the uptrend is resuming.
 NSP Daily

The daily chart shows that NSP was very bullish from the April low to the
July high. After that, NSP had a quick, deep pullback followed by at least a
month of sideways trading. Then there was a nice rally from the August low
to this month’s high, followed by a much smaller pullback. Friday’s bullish
trading suggests that the pullback from this month’s high could be over and
the uptrend could be resuming. The next upside target is above the
summer high.

We are going to review a Call Debit Spread for NSP.

Traders who want a more leveraged approach could consider buying NSP
calls. NSP has options expiring in November, December, January, and
April.

Buy to Open NSP January 20th 60-Strike Call

Sell to Open NSP January 20th 70-Strike Call

We can see from the Call Option Spread Analysis Calculator that if the
NSP stock price declines by -2.5%, stays the same as it is now, or
increases in price at all at when the options expire, the spread will show a
profit of 29.9% or $230. If the NSP stock price is down -5% at expiration,
the spread will make a 23.3%, or $179 profit. If NSP is down
-7.5% when the options expire, the spread will lose -0.5% or -$4.

EARNINGS SEASON: There are four “Earnings Seasons” a year. The seasons begin in
January, April, July, and October and they each last about two months. The earnings
reports can have an impact on the stock price. We don’t know if the impact is going to
be positive or negative (or nothing at all). It’s up to you to decide if you want to be in a
trade when the earnings report is announced. Here’s a link for a page that can help you
keep track of the report dates:

https://www.earningswhispers.com/calendar

Note: Profit performance displayed in this newsletter does not include transaction
costs.

This newsletter includes some trading ideas following Chuck Hughes’ trading
strategies along with educational information. For a complete listing of Chuck’s
exact trades, including specific entries and exits and real time Portfolio tracking,
please call Brad at 1- 866-661-5664 or 310-647-5664