BBAI Trade Idea

BBAI chart from 6/18 early afternoon.

BBAI is an interesting small priced stock with plenty of potential upside. The fibonacci retracement from the all time highs shows the 50% marker at around $6.36 and the stock has been consolidating for a while. As always there are many different ways to take this trade.

One possibility using collars is to buy the shares at the current price of around $4.20 and go to the September option chain. Buying the $4.50 put and selling the $6 call would cost about $0.60 or $60. The total cost would $480.

If the stock goes in the right direction, the max payout would be about $120, which is a 25% return. If the stock goes no where or lower, the max loss would be $30.

This risk to reward setup seems worth it. The overall risk and payout can also be a little higher if a few adjustments are made along the way.