Intuit (INTU) had a massive run-up in June, representing a 17% move in just 18 trading days. The charts indicate the TurboTax maker could be caught in a trading range from here and I've got an options strategy that wins if it remains stuck. Intuit shares presently trade at a forward P/E ratio of almost 39.
This is a premium relative to the industry's average forward P/E of 28. If INTU keeps going up, it will soon have to deal with upside resistance at $676, which also happens to be an all time high. On the flip side, if this upward momentum starts stalling, the next area of support appears to be at $627.
I've used Fibonacci retracements to project downside price targets for this scenario. An Iron Condor is a great trade structure to use when dealing with trading ranges like this one. To construct an Iron Condor, all I have to do is sell a call credit spread and a put credit spread at the same time.
The strikes are determined by the trading ranges identified above. The trade Sold INTU 680-690 CALL/620-610 PUT Iron Condor Credit (also max profit): $437 Max loss: $563 Expiry: 26 th July 2024 To construct the PUT SPREAD that I will be selling, here is what I need to do: Fibonacci analysis tells me that $627 is near term support. This is an area where INTU is likely to bounce back.
To add some buffer to this, I have selected to sell a $620 - $610 put spread which has a 78% chance of expiring worthless (i.e. in my favor).
For the CALL SPREAD side of the equation, I need to do somet.
