PKG: Stable with Fat Moving Averages

After a huge upward gap in Februrary, PKG slowly fell down to a rather stable status. For the past two months, PKG has been stuck between 65 and 70. This makes it a stable stock, at least for the short-term. And that’s all that matters in swing trading.

The Technical Analysis for PKG

As I mentioned, this stock is quite stable. No interesting gaps or candlesticks are present. The average direction index is so low as to imply no upward or downward trend. The relative strength index is in normal range. The 10-day and 30-day moving averages are basically on top of each other right now. Everything points to stability.

My Prediction for PKG

I believe PKG’s stability will continue to hold for at least until the end of June.

My Move | PKG Calendar Spread

I will sell 5 calls at the strike price of 70 (out of the money) and buy 5 calls at the strike price of 70 (the same strike price), but with options that expire a month out, in July. As long as PKG remains stable, I should be able to profit off of closing this position while the July options still have implicit time value. If PKG rises slightly, I will profit even more from the sales of the July-expiry options. Just as long as PKG does not cross 70 or dip too low below its current value, I should manage to profit off this play.

Cost of buying 5 July calls at 70: ($425)

Profit from selling 5 June calls at 70: $200

Net cost to open the calendar spread: ($225)