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Fly High With Profits from Northrop Grumman Corporation (NOC) Stock

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Northrop Grumman Corporation (NYSE: NOC ) has had an impressive ascending trend as shown in the weekly chart below. These are the types of stocks that I like to engage with longer-term trades. They usually end up yielding headache-free profits for the most part.

Click to Enlarge When dealing with reliable long-term trends, I don't bother chasing price targets. Instead, I sell risk against pivot levels. I am essentially selling someone a lotto ticket that eventually will be a loser for them.

In this case, I will use the NOC options market to establish a bullish position for the next few months. I structure it so that I don't have to be surgically accurate in my entry points. Options are a great way to leverage great trends with little out-of-pocket risk.

NOC Stock Trade Idea

The Trade: Sell NOC Aug $185 put. This is a bullish trade for which I collect $1.50 to open. By selling naked puts, I am committing to owning the stock at my strike sold if price falls through it. The 22% price buffer from current levels give me a 90%-plus theoretical chance of success. I could also buy a few sacrifice shorter term puts to help me temporarily cover the possible worst case crash scenario.

Selling naked puts is not suited for all traders. Luckily, I can modify this trade to be friendlier to less aggressive risk tastes and account sizes.

The Alternate: Sell NOC Aug $205/200 credit put spread. This is also a bullish trade for which I collect 50 cents to open. The yield if I win would be 13% on money risked. The 14% buffer gives me a 90% theoretical chance of success. This trade will need to survive earnings reports, so that would be a temporary worry.

Since I am not required to hold my trades open through expiration, these longer-dated trades are easy to manage. I can close or move them for partial gains or losses if my thesis changes.

Nicolas Chahine is the managing director of SellSpreads.com . As of this writing, he did not hold a position in any of the aforementioned securities. You can follow him on Twitter at @racernic and stocktwits at @racernic .

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The post Fly High With Profits from Northrop Grumman Corporation (NOC) Stock appeared first on InvestorPlace .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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