Rolling Into 3D Systems

Voxeljet (VJET) was a great breakout pickup from last week, but I want to diversify within the 3-D group while maintaining upside. It looks like a perfect day to sell another third of the VJET holding and roll the profits into 3D Systems (DDD) calls. The July 19 $55 calls in the mid $3s look like the strike where I would have the most comfort. Don't get me wrong on VJET -- the chart still looks fantastic, but I want to branch out a bit more between the names. 

3D Systems (DDD) Source: StockCharts.com View Chart » View in New Window »

Based on the daily chart, a hard stop at $53.90 would be needed, otherwise, the downside is probably $48. If $48 fails, then significant downside likely awaits. The current rounding bottom with the price breakout paired with high volume and an RSI breakout sets up a possible trip to $64. With 30% short interest, there are plenty of shorts to trigger an upside squeeze. If a breakout fails to materialize, I've limited my risk by using calls and limited the overall trade further by only using profits from the VJET position. Also, if the breakout fails, the options should hold time value based on the volatility around this name, so even a pullback to $54 wouldn't result in a total wipeout. In fact, the stock could move back to the lows $50s in the short term and these calls would still hold enough value to let me escape the overall VJET-DDD trade with a small profit....44 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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