MNK – Mallinckrodt plc (Long)
Closing price: $72.94
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)