Novice Trade: LPX

The Trade: buy 1 Louisiana-Pacific Corp  (LPX) August 26 call for $0.70.   Louisiana-Pacific Corp is a 44-year-old building materials wholesaler. It has traded between $17 and $27 (both rounded) over the past 52 weeks. LPX has a solid balance sheet that shows its cash exceeds total debt by almost a 2 to 1 factor. In addition, the company has over $4 a share in cash.   LPX trades at a forward PE of just 13x. Earnings per next year are being projected now as $1.51 a share. If given say a PE of 15x, it would have the stock trade at least in the low $20s.   LPX analysts expect the company to report earnings on August 1. The average of analyst expectations for the second quarter earnings is $0.57 a share. If so, that would be a 100% increase year over year. For this current year, analysts have LPX doubling its earnings produced in 2016.   Technically, I read LPX's one-year chart of its stochastic and RSI as being strongly bullish. LPX had breakout potential rising now.   The trade tactic I prefer now for LPX is a long shooter -- a near-the-money call expiring in August. This trade is very high in risk, because time and price movement are key to the trade becoming profitable. Time to expiry in August is only 32 days. Thus, if you take the trade, use only highly discretionary capital.   The trade is as follows: Buy 1 LPX August 26 call for $0.70. The suggested target to close for a gain is $1.20, and the suggested stop out is a bid of $0.20. Best to scale into the position using limit orders.  
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