Both charts above are Daily charts. The top chart is widened out to see the Gartley pattern. My own research has proven to me the Gartley pattern has a fantastic success rate of approximately 75%. I define success as hitting the .618AD level before breaking the X point level.
The bottom chart is zoomed in to see the Doji Gap Up candlestick pattern made by today's candle and the previous candle. This formed on high volume. This is a very Bullish indication.
On the zoomed in chart, it also looks like we're forming a Fry Pan Bottom candlestick pattern. If we break out of that to the upside, that would be a very Bullish indication.
So, based on the above, I got a Jan 60 Call for $3.40. I know that Theta time decay is relatively high given that there's only 3 weeks left until expiration. To deal with that, I plan to turn this position into a Call Spread after a sufficient increase in the stock price. If I can sell a 72 strike Call option for $3.40 then I'll have a risk free trade.
The good thing about being close to expiration is that Gamma is also high. So if the stock price rises, the option value will rise quickly.
The Quarterly Earnings Report is due out Jan 14th at 8am ET. I plan to close this position before then. If the target isn't hit by the ER, then I'll sell the option on the afternoon of the 13th, which should enjoy a boost in Implied Volatility.
Since we have defined risk, thanks to using options, I'm not very concerned about a Stop. If I had the stock, I'd put the Stop just under the D point of the Gartley, or if I could afford the potential loss, a better spot would be just under the X point of the Gartley.
For the Target, I'm using the .618AD Fibonacci retracement level, which is 71.62.
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