Bull & Bear: Masco Corp. (MAS)

Shares of Masco Corporation MAS are trading lower on the session by 1.74%, at $13.27. With the stock recently being cut to underperform at RBC, you have to wonder where shares are heading next… Bulls: Bulls will note the significant bottom that the stock has placed over the past 6-9 months; it also appears that the stock is forming a long-term bull flag, which would have the potential to move shares significantly higher. Bulls will also note that the stock is still trading above an upward-trending 200-day moving average, which is evidence that shares are under long-term accumulation. A bullish trader could buy the July $13.00 call for $1.00 and sell the July $15/13 strangle for a net credit of $0.90. The total net debit of $0.10 gives the trader highly leveraged upside. Bears: Bears will note that shares have huge upside resistance at $15.00 and that the recent drop from that level only confirms that shares will not break through the level any time soon. In addition, if Masco Corporation were to break down through $13.00, a historical support level, a long-term bear trend would then be firmly in place. Shares would likely test $10.00 soon after. A bearish trader could buy the October $13/10 1x2 put spread for a net debit of $0.70. This is a cheap bet that shares cruise lower and test $10.00 support. Losses on the trade would not come into the picture until below $8.50. Masco Corporation manufactures, distributes and installs home improvement and building products. It is manufacturer of a range of home improvement and building products, including faucets, cabinets, architectural coatings and windows, and installers of insulation for the new home construction market.