Hitting the road in Texas Roadhouse

One of the stocks that I have stalking this week is $TXRH and it looks ready for a new breakout. What I have been monitoring is the elevated RSI (wanted to see it work off some) and I also wanted to see how the MACD would resolve (has become embedded here, does it bounce or cross down).

A look at the Daily chart:

TXRHThere are several ways to start a trade here. One of the easier ways to play is to just go long stock and protect with a Put. Here is how it works:

  • You go long the stock
  • You buy a near-the-money Put to protect against any downside move
  • One reason this may be tough here is that you only have the 22.50 & 25 strikes to work with.

Other trade ideas:

Risk Reversal

  • A June 22.5/25 Risk Reversal
  • Long the June 25 Call ($.30)
  • Short the June 22.5 Put ($.25)
  • This trade can be done for a $.05 debit at the moment
  • Note: the June 20 Call has very large Open Interest so this makes me more bullish

Long Call

  • Buy the June 25 Call for a $.30 debit

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