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Overbought Stock of the Day: Pulse Biosciences (PLSE)

Overbought Stock of the Day: Pulse Biosciences (PLSE)

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  • Specialty medical device company Pulse Biosciences (PLSE) have surged nearly four-fold since September, moving from $10 per share to just over $40. Shares have naturally had a few overbought moments along the way, including at present.

    With a relative strength index, or RSI of 82, shares are well into overbought territory. Prior moves into this territory in recent weeks have led to modest pullbacks in shares. However, prior overbought levels have yet to get as high as the present move in shares.

    The company is still in the early stages of development and is currently unprofitable.

    Action to take: Based on the prior moves in shares, traders can likely expect a small pullback from here. However, with a strong uptrend in place, it would be best to wait for the RSI to come off of oversold levels, say to the 60 range, then bet on a move higher.

    The July 2021 $50 calls are the trade with the farthest strike date and highest strike price. With a current share price of just under $42, shares would need to appreciate less than 20 percent from here for this trade to move in-the-money.

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  • Currently, the calls have a bid/ask spread in the $7 range, but a small pullback in the next few days could get the options down to a price of $5 or $6 before the next move higher.

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