10/09/2013

Intuitive Surgical, Inc.   NASDAQ: ISRG

Risk: defined

The stock has been firm over the past weeks trading around the $370 – $390 range trading down bottoming at the 357 level representing a roughly a 39% decline since early February of this year from a hi of 585. The stock is poised for an up move going into the Earnings Call next week on the 17^th after the close.

Trade: buy the October Monthly 410c/425c/430c   +1/-3/+2 for .80 to 1.00 or better

Maximum Risk: $80 - $100.00 for the next 3 days

Maximum Reward: $1400.00 - 1420.00

Open Int.             Call   strike  Put    October Weekly(3)     October Monthly (10)

                             99       410   0            99                                    450

                             25       415   0            25                                    260

                               2       420   0              2                                    400

                                0      425   0              0                                    180

0          430    0              0                                    295

0      435   0              0                                    160

.                               0      440   0              0                                    235

                                0      445   0              0                                    125

                                0      450   0              0                                    355

October Weekly IP 48.7%

Average Daily Volume 507,000 /50 day moving avg. volume

Even if Intuitive were to preannounce this week if the numbers or outlook were bad the risk is minimal. If the numbers or outlook were positive and the stock rallied as it has shown to do in response the buyer of the Broken Wing Butterfly in the October Weekly’s would still make $900 above 430 with a break even point at 410 area.

Maximum Return on Margined Capital 1400% at 425

Roughly   14/1    reward/risk ratio                           

Technical resistance / support:

Short Trend line staring at a hi of 33.13 on 10/02/2013 now support      30.15

Broke through Resist Trend line at 369** on 10/07/2013 at 369

Support Trend line now resistance starting at 32.61 on 9/08/2013           31.15

Technical Resistance:             400*            412***        445***                   

Gap retrace hi of 433.25

Even the same Broken Wing Butterfly in the regular October monthly options is attractive at 2.50 or the 420/450/460 1/2/3 for 2.75 or better puts you in a great position to capitalize on next week’s earnings should they be good or have a positive tone to them.

The risk is minimal at $300 or less and the reward above 460 is $700 and at 450 should the stock close there optimally, the value gains would be $2,700

Over 460 that is still a 233% gain and at 450 at October Monthly expiration it would the maximum return on risk would be it would 900% both over a twelve day period.

Unfortunately ISRG only managed a rally to the 400 level before backing down closing at 390.18 on Friady. 

              

*Disclaimer: This is not a recommendation. All trading entails risk. Anyone employing any strategies and having limited knowledge of options trading should consult with a FNRA licensed professional.