SRS ready to DOUBLE?

We are looking at SRS (UltraShort Real Estate Pro shares). SRS has made a double bottom at the $20.00 level and could be setting up for a nice swing trade long. If you are the type of trader that wants to wait for more confirmations you can look at the $26.00 level as the trigger to enter a long trade with the target being around $45.00 to $50.00 a share. 

SRS along with SKF, QID, and SDS moves fast as they are Ultra shares and can move double what the counter index the ultra share are tracking. As you can see if you look at a daily chart of SRS the high was around $300.00 a share and now we are sitting at $20.00! 

Do we think SRS can make it back to the $300.00 highs? No, we dont but SRS along with SKF look like a nice risk / reward trade sitting down here at the lows. Proir support is near the $50.00 level which is now resistance, so we would be looking for a re test of that support / resistance level in the next few months, if not sooner.

Another way to participate would be to purchase the OCT SRS $25 calls , but they are expensive at this level closing Friday at $6.10 per contract. The $50.00 OCT SRS calls closed at $2.35 if you were looking to place a bull call spread. If we were looking at doing a bull call spread we would buy the $25.00 calls then wait until SRS reached the $30.00 level to sell the $50.00 calls bringing in more premuim on the call we would be selling. Yes, doing a bull call spread limits your upside profits, but the $50.00 strike is more than 100% away from the current price of the stock. Think about that you can buy the stock and sell a call 100% away and bring in 10% on your position right now! 

In doing a bull call spread your risk would be the difference from the call you purchase $6.10 and the call you sell $2.35 for a total risk of $3.75 with a max gain around $27.00 dollars, if SRS closes above $50.00 by octobers expiration. If SRS does in fact go up to the $30.00 level and then we sell calls we could get a net credit just for participating in the trade. 

With a risk of $375.00 doing the bull call spread (at current levels) for a potential of profiting $2,700 per contract, SRS is a good stock to keep a close eye on!