Carter Worth shared with the viewers of CNBC’s “Options Action” his technical analysis of Verizon Communications Inc. (NYSE: VZ). He said the stock belongs to a group called the Dogs of the Dow, which is a term for the Dow Jones Index stocks that have a very high yield. The presumption is that they must have a high yield because they have been performing poorly, explained Worth.
In his analysis, Worth noticed that since 2000, the Dogs of the Dow outperformed the Dow Jones Index significantly. He has also noticed Verizon, which yields around 4.3 percent, is lagging the Dow Jones Index, but as the market sold off, Verizon moved higher. Worth has also noticed some bullish patterns on its chart, like wedge and cup and handle, and he expects that it might trade higher.
Mike Khouw suggested that options might be the best way to trade the potential move higher. He wants to buy the April 55 call for $3. The trade breaks even at $58 or 2.91 percent higher.
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