MNK – Mallinckrodt plc (Long)

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MNK – Mallinckrodt plc (Long)

Closing price: $72.94
Target: $82.50
Trade idea: October 80x calls currently trading at about 1.70

On 8/7 Mallinckrodt reported Q3 earnings above estimates and raised full year guidance. The company reported EPS of $1.20 and revenues of $653.1M vs the estimates of $0.87 and $611.9M. The stock rallied over 5% on the strong report but gave up most of the gains and has been trading in a tight range since then.

The weekly chart tested and bounced off rising trend line support two weeks ago and has put in a potential reversal which will be confirmed next week with a break of $73.69. If $73.69 is broken it will be a long signal with a price target of about $82.50 for September.

The trade idea; buy to open the October 80x calls only if the stock breaks $73.69 next week.

Weekly chart: (right click > view image for full size)

MNK

SNDK – SanDisk Corp. (Long)

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SNDK – SanDisk Corp. (Long)

Closing price: $94.03
Target: $96 – $96.25
Trade idea: September 97.50x calls currently trading at about 1.25.

On 7/16 SanDisk reported Q2 earnings which topped estimates. The company reported EPS of $1.41 and revenues of $1.63B vs the estimates of $1.39 and $1.60B. The company however issued soft guidance for Q3 which sent the stock nearly 15% lower. Since then the stock has been trading sideways in a channel on the daily and is now beginning to breakout. The weekly chart has also put in a potential reversal pattern which will be confirmed with a break of $94.45 next week.

The price target is $96 – $96.25 which can come as early as next week. The trade idea; buy to open September 97.50x calls which closed at 1.19 x 1.28 yesterday.

Weekly chart: (right click > view image for full size)

SNDK

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