It's a Two-for-Tuesday kind of day, especially in the small-cap names. I've been a slight doubter of Helios and Matheson Analytics (HMNY) with its acquisition of MoviePass, but it's getting harder to ignore this company when we continue to see the ginormous subscription numbers from Netflix (NFLX) .
While I don't believe MoviePass will have the same appeal, I do believe it will continue to see huge growth numbers for several years to come. Furthermore, the company's move into potentially partnering with film distributors is intriguing. Using venues like Sundance and South by Southwest should provide access to a potentially lower cost entry into that side of the industry.
Shares of HMNY are breaking above resistance at $10 today and 2018 has delivered a strong uptrend after a disastrous December. We appear to be headed into the $12-14 range.
The recent bullish crossover in the Vortex Indicator is something we haven't seen since the summer. Trend and momentum both appear favorable, so a speculative play in the options market is intriguing.
The key with HMNY is to define and limit risk. The $10 calls are most attractive here as they have intrinsic value and still offer big upside.
The trade: Buy to open 1 March $10 call at $1.45 or better.
Max Risk: $145
Max Reward: Unlimited
Days until expiration: 51
Intrinsic Value: $32
This is a high risk-high reward position, so it is not for everyone. The defined risk offered by the call should open the possibility to more traders for consideration. I would use $8.50 as a stop, but this is one trade where I would consider holding unless we saw several consecutive closes under $8.50.
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