Allergan Offering Possible 25% Return Over the Next 25 Calendar Days

Allergan's most recent trend suggests a bearish bias. One trading opportunity on Allergan is a Bear Call Spread using a strike $97.50 short call and a strike $105.00 long call offers a potential 25% return on risk over the next 25 calendar days. Maximum profit would be generated if the Bear Call Spread were to expire worthless, which would occur if the stock were below $97.50 by expiration. The full premium credit of $1.50 would be kept by the premium seller. The risk of $6.00 would be incurred if the stock rose above the $105.00 long call strike price.

The 5-day moving average is moving down which suggests that the short-term momentum for Allergan is bearish and the probability of a decline in share price is higher if the stock starts trending.

The 20-day moving average is moving down which suggests that the medium-term momentum for Allergan is bearish.

The RSI indicator is above 80 which suggests that the stock is in overbought territory.

To learn how to execute such a strategy while accounting for risk and reward in the context of smart portfolio management, and see how to trade live with a successful professional trader, view more here

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