Unlock the Power of Trading Platforms: Top Picks from Investors
The world of trading is abuzz with excitement, and investors are eager to share their top picks for the best trading platforms. One such platform that has caught the attention of many is Arista Networks (ANET), a cloud networking solutions provider that has seen a remarkable 20% year-over-year increase in sales, reaching $1.81 billion, and a 30% rise in earnings to 60 cents per share.
Arista’s Rise to Fame
Arista’s impressive performance has led to a massive move, with its stock rising 6.85% to an all-time high. This surge has investors bullish on the company’s prospects, and many are looking for ways to capitalize on its growth without breaking the bank.
The Power of Call Options
One strategy that investors are using to gain exposure to Arista’s growth is through long call options. A call option is a contract between a buyer and seller that gives the buyer the right to purchase a stock at a certain price (strike price) up until a certain date (expiration date). This approach provides leverage, allowing investors to gain a similar exposure to the stock with a fraction of the capital required.
A Real-World Example
For instance, an investor looking to buy 100 shares of Arista stock would need to invest around $12,900 at the current share price. However, by buying a call option, they could gain a similar exposure with a much smaller investment of around $3,100. The break-even price for this call option would be equal to the strike price plus the premium paid, which would make the break-even 141. While the most the trade can lose is the premium paid of $3,100, the upside is unlimited if the stock continues to rise.
Reducing Risk with Bull Call Spreads
Savvy traders can further reduce the risk by selling an out-of-the-money call, turning the trade into a bull call spread. For example, selling the Sept. 19, 160-strike call would reduce the trade cost by around $950 but would also limit the upside above 160. Additionally, a stop loss could be set if Arista stock drops 8% from the entry point.
Arista’s Strong Fundamentals
According to the IBD Stock Checkup, Arista is ranked No. 1 in its industry group, with a Composite Rating of 99, an EPS Rating of 98, and a Relative Strength Rating of 95. These strong fundamentals make it an attractive option for investors looking to capitalize on its growth.
Expert Insights
Gavin McMaster, a seasoned trader with a Masters in Applied Finance and Investment, specializes in income trading using options. He emphasizes the importance of patience and waiting for the best setups to ensure successful trading.
Remember to Always Do Your Due Diligence
While options can be a powerful tool for investors, it’s essential to remember that they come with risks. Investors can lose 100% of their investment, so it’s crucial to do your own due diligence and consult with a financial advisor before making any investment decisions.
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