The Trader Harbor
  • Business
  • Politics
  • World News
  • Stocks
  • Business
  • Politics
  • World News
  • Stocks

The Trader Harbor

Stocks

SHOP Stock Ready to Surge: An Options Strategy to Take Advantage of the Big Move

by admin September 19, 2024
September 19, 2024
SHOP Stock Ready to Surge: An Options Strategy to Take Advantage of the Big Move

Shopify (SHOP) continues to show strong potential for growth, which is supported by fundamentals and technicals. As the broader e-commerce market expands, SHOP is well-positioned to capture additional market share from rivals such as Amazon.com (AMZN), thanks to its competitive suite of solutions for businesses of all sizes. SHOP has continued outperforming its peers in earnings and revenue growth, which supports its future growth.

Recently, SHOP’s stock price broke out above its trading range and has pulled back to its $67 support level. This provides an attractive risk/reward opportunity for bullish exposure. The stock is also trading above its 200-day simple moving average, a positive trend signal, with a potential breakout to the $85 level based on historical price action. This gives investors an entry point near a solid support level while maintaining significant upside potential.

CHART 1. DAILY CHART OF SHOP STOCK. After breaking out of a trading range, SHOP’s stock price has pulled back to a support level. SHOP has the potential to break out to the $85 level. The stock is trading above its 200-day moving average, its relative strength to the S&P 500 is close to zero, and the MACD is in the early stages of a bullish crossover.Chart source: StockCharts.com. For educational purposes.

Fundamental Analysis of SHOP Stock

Shopify’s valuation appears fairly justified, with a Forward P/E ratio of 53.47x, which is high but reflects its exceptional expected earnings per share (EPS) growth rate of 185.5%, compared to an industry average of only 13.68%. Its expected revenue growth of 21.88% also outpaces the industry average of 8.59%. Moreover, despite the high valuation, SHOP maintains healthy net margins at 16.33%, close to the industry average of 17.83%. This rapid growth and strong profitability metrics support the stock’s long-term bullish outlook.

SHOP Stock Options Structure

I recommend a Call Vertical Spread using the SHOP November 1, $75/85 strikes at a net debit of $2.96 to take advantage of this potential upside. This trade entails:

        •       Buying the Nov 1 $75 calls at $4.33

        •       Selling the Nov 1 $85 calls at $1.37

Below is the risk curve for the Call Vertical Spread.

This options strategy offers a maximum reward of $704, with a risk of $296, providing a favorable risk/reward ratio. The breakeven price for the trade is $77.96, meaning Shopify’s stock price only needs to trade slightly above its current levels for this strategy to be profitable. If SHOP reaches $85 or higher by expiration, this trade could achieve a 238% return on investment!


0
FacebookTwitterGoogle +Pinterest
previous post
Cruz interrupted by anti-Israel agitator who yelled, ‘F—ing Jews’ during hearing on ‘hate’
next post
JPMorgan creates new role overseeing junior bankers as Wall Street wrestles with workload concerns

Related Posts

Investing with the Trend: Appendix

June 14, 2024

Overbought Conditions Reflect Strength and Said Strength Drives...

March 31, 2024

MEM TV: This Stealth AI Stock is Ready...

May 11, 2024

Why Novo Nordisk’s Stock Price Recovery Makes It...

May 8, 2024

Emerging Stocks to Watch – Breakouts, Momentum &...

May 18, 2025

Stock Market Dips Below 200-Day Moving Average: Are...

March 12, 2025

Sector Rotation Model Flashes WARNING Signals

June 12, 2024

Are Trump’s 25% Tariffs a Game-Changer for Steel...

February 12, 2025

Is the S&P 500 Forming a Bear Flag...

May 9, 2024

The SCTR Report: Why PLTR Stock Remains a...

May 1, 2025

    Stay updated with the latest news, exclusive offers, and special promotions. Sign up now and be the first to know! As a member, you'll receive curated content, insider tips, and invitations to exclusive events. Don't miss out on being part of something special.


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Latest

    • Apple reveals complex system of App Store fees to avoid E.U. fine of 500 million euros

      June 30, 2025
    • Breakdown of NVDA’s Stock Price and S&P 500: Actionable Technical Insights

      June 30, 2025
    • Thom Tillis announces retirement from Senate after clash with Trump

      June 30, 2025
    • SCOOP: House Republican eyes bid for Thom Tillis Senate seat after Trump attack

      June 30, 2025
    • Dem delay tactic ends, debate begins on Trump’s ‘big, beautiful bill’

      June 30, 2025
    • GOP, Dem senators remain divided over Medicaid after Trump’s ‘big, beautiful bill’ vote

      June 30, 2025

    Categories

    • Business (1,272)
    • Politics (3,873)
    • Stocks (1,477)
    • Uncategorized (45)
    • World News (1,265)
    • About us
    • Contact us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: TheTraderHarbor, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 thetraderharbor.com | All Rights Reserved