News Can Lead to Gains
News is widely followed by traders who understand that price moves can follow the release of news. That’s why many traders follow news related to new products like the one identified in this recent Business Wire report about LiveRamp.
The company provides the identity platform leveraged by brands and their partners to deliver innovative products and exceptional experiences.
LiveRamp IdentityLink connects people, data, and devices across the digital and physical world, powering the people-based marketing revolution and allowing consumers to safely connect with the brands and products they love.
LiveRamp has the largest open, people-centric identity graph, ingesting more than 7 billion records per minute and connecting to more than 550 destinations. The company operates in more than 150 markets.
People-centric targeting and measurement should be at the core of every marketer’s approach and LiveRamp’s graph provides sufficient scale to meet marketers’ needs.
The company’s announcement said that they were extending the IdentityLink identity resolution platform to business-to-business (B2B) marketers.
LiveRamp B2B is a global suite of solutions tailor-made for B2B marketers, enabling greater marketing efficiency, precision and reach than ever before.
Built on top of LiveRamp’s best-in-class solutions for B2C marketers, LiveRamp B2B empowers B2B marketers to activate their first-party data, access the best third-party audiences globally, and measure the impact of their marketing initiatives, all in a privacy-conscious way.
Together, these solutions provide a true omnichannel view of the B2B customer, which in turn ensures that people receive personalized messages that aid in the discovery of relevant products and services for their professional lives with control, transparency, and choice.
“B2B marketers have historically lacked solutions that enable them to unlock the value of their first-party data and leverage third-party data to power their marketing initiatives, including Account Based Marketing, and measure the results of their marketing spend,” said Pieter De Temmerman, COO of LiveRamp B2B.”
“By providing a global enterprise suite of B2B marketing solutions, LiveRamp B2B now enables omnichannel B2B onboarding, marketing, and analytics in a way that enables B2B marketers to see measurable marketing results.”
According to Forrester Research, Inc., B2B marketers can achieve better business outcomes by prioritizing tools and tactics designed to “personalize, automate and analyze interactions with customers across channels.”
LiveRamp B2B helps marketers reach these goals by enabling them to identify and reach their target audience with a level of precision and personalization with ease at an unprecedented scale.
“As a longtime B2C customer of LiveRamp, we know the value identity resolution brings to reaching the customer at the right time in the right channel,” said Gavin Warrener, Director of B2B Marketing of T-Mobile.
“Now, we’re able to leverage LiveRamp B2B to better reach and understand our B2B customers in new ways, harnessing accurate identity at the professional and account level.”
Traders seemed to like the news and the stock moved up.
The up move could mark the completion of a consolidation pattern that can be seen in the weekly chart.
A Trade for Short Term Bulls
As with the ownership of any stock, buying RAMP could require a significant amount of capital and exposes the investor to standard risks of owning a stock.
To reduce the risks of a trade, an investor could purchase a call option. This allows them to benefit from upside moves in the stock while limiting risk to the amount paid for the options. However, buying a call option can also require a significant amount of capital and includes the risk of a 100% loss.
Whenever an option is bought, the maximum risk is always equal to 100% of the amount of spent to purchase the option. Since options cost significantly less than a stock, the risk in dollar terms will usually be relatively small to own an option.
To further limit the risks of the trade, an investor could use a bull call spread. This strategy consists of buying one call option and selling another at a higher strike price to help pay for the cost of buying the first call. The spread strategy always reduces the risk of an options trade.
This strategy is designed to profit from a gain in the underlying stock’s price but has the benefit of avoiding the large up-front capital outlay and downside risk of outright stock ownership. The potential risks and rewards of this strategy are summarized in the chart below.
Source: The Options Industry Council
Both the potential profit and loss for the bull call spread are limited. The maximum loss is equal to the net premium paid when the trade is opened. The maximum profit is limited to the difference between the strike prices, less the debit paid to put on the position.
This strategy could be especially appealing with high priced stocks where the share price and options premiums are often a significant commitment of capital for smaller investors.
A Specific Trade for RAMP
Every day, we scan the markets looking for trades that RAMP low risk and high potential rewards. These trades are available almost every day and we share them with you as we find them. Now, it’s important to remember these are trading opportunities in volatile stocks.
When we find a potential opportunity, we evaluate it with real market data. But because the trades are volatile, the opportunities may differ by the time you read this. To help you evaluate the current opportunity, we show our math and explain the strategy.
For RAMP, the April 18 options allow a trader to gain exposure to the stock.
An April 18 $60 call option can be bought for about $3.20 and the April 18 $65 call could be sold for about $1.25. This trade would cost $1.95 to open, or $195 since each contract covers 100 shares of stock.
The amount paid to enter the trade is the largest possible loss on the trade. This is generally true whenever a trader is creating a debit to enter an options trade. “Creating a debit” means there is a cost to enter the trade. You could create a debit by simply buying puts or calls to open a directional trade.
In this trade, the maximum loss would be equal to the amount spent to open the trade, or $195.
The maximum gain on the trade is equal to the difference in exercise prices less the amount of the premium paid to open the trade.
For this trade in RAMP the maximum gain is $3.05 ($65 – $60 = $5; $5- $1.95 = $3.05). This represents $360 per contract since each contract covers 100 shares.
Most brokers will require minimum trading capital equal to the risk on the trade, or $195 to open this trade.
That is a potential gain of about 56% based on the amount risked in the trade. The trade could be closed early if the maximum gain is realized before the options expire.