Shares of the digital television entertainment provider, DIRECTV (DTV), are up 32.56% year to date vs. the smaller DISH Network’s (DISH) 51.90% gain. DTV currently trades a forward PEG ratio of just 0.68. Applying a conservative 0.90 PEG ratio, DTV would still be trading at a significant discount to DISH shares. DTV is also expected to grow revenues by 5.60% next year, which is more than double that of DISH.

THE TECHNICAL TAKE

DTV shares have been trading in a well-defined uptrending channel since mid-October. On October 18, the stock confirmed a successful test of support, rising 1.71%.  This sets up a low risk trade with short-term upside potential to $70. That will be an area to take some or all of the position off and look to reload on another test of support. To effectively manage risk an initial stop loss can be placed on a stock position just under the bottom of the channel at $64.75.

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TRADE IDEA

Buy the Jan 2014 $67.50/$70 call spread for a $0.75 debit or better
Stop loss- None
Upside target- $1.50-$2.50

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