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We have been managing a position in Cintas Corporation (NASDAQ:CTAS) since late October. Strategic Trader subscribers received an alert to take profits on the CTAS November 16th $175 Put Write on Nov. 8th. We bought back to close that naked put write, and this morning we are recommending another bullish trade on CTAS.
The uniform-maker is continuing to do well, and we expect the employment outlook to increase demand through the end of the year. We are only rolling out our naked put to the December 21st expiration because that is just before the company’s earnings are likely be released.
If we look at a daily chart of CTAS, we can see that it crossed below the $178 level in October. The $178 level acted as resistance in March of 2018. Regular readers know that old resistance levels often become new support levels, and CTAS may be testing that level now.
We continue to feel that CTAS has been oversold and still has room to move. Since CTAS came down yesterday after recovering slightly in early November, there is good amount of premium in the put options.
Still, the market is swinging back and forth while it forms a bottom. With that in mind, we think a hedged entry with these short puts is the best approach.
‘Sell to open’ the CTAS December 21st $175 Put Write (CTAS181221P00175000) for a minimum price of $4.00.
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