Methanex Trade

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Note from Tim: I got a nice email from a Sloper who thought the blog could use some trades more at the beginner level; he kindly included two of his own to get things started. Here is the second…….

The concept is to post a trading idea that starts a discussion about the trade. The post is for novices like me to learn from each other especially from the experienced Slopers. I have laid out the basics of the company, the trade idea and then the charts. As you can see, the charts are very basic and hopefully will become more sophisticated as experience and feedback occurs. Please join in the trading discussion:

  • Methanex Corp (MEOH) Produces and supplies methanol. EPS is projected to increase 2,436% mainly because of recovering from a loss in 2016.
  • IBD ranks them 12th in their group with an overall composite rating of 80, Zacks rating is a 2 (1 – 5 rating, 1 strong buy, 5 strong sell) and Thomson Reuters has an average of a buy rating from 13 analyst.
  • Stock has low liquidity
  • MACD showing down

I have waffled on the trade idea. I have sold a put and have sold a vertical call spread. The idea now is to sell a Nov 17 $47.5 put @1.02. Provides a 2.14% return if held the full 44 days. Their volatility rank is fairly high and has an expected move of +- $4.37.

Looking at the chart below, I wonder if they are in the same spot as the blue highlighted square back in 2002. Looking at the 2nd chart, it is bumping up against the trend line that started 3/7/2014. Will it bust through as it did in 2002 when it even surpassed the higher channel? Will it resist the line and fall back toward the bottom trend line that started in 4/11/2000?