109.3% Profit Potential for this REIT?

Dear Reader,

REITs (Real Estate Investment Trusts) are breaking out. Today we are going to review one of my favorites. Today we will be looking at a monthly chart for Realty Income Corp. stock symbol: O.

Realty Income Corporation is a real estate investment trust that invests in free-standing, single-tenant commercial properties in the United States, Spain and the United Kingdom that are subject to NNN Leases. The company is organized in Maryland with its headquarters in San Diego, California.

Now, let’s begin to break down the monthly chart for O stock.

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Buy O Stock

As the chart shows, in March, the O 1-Month Price, crossed above the 10-Month simple moving average (SMA).

This crossover indicated the buying pressure for O stock exceeded the selling pressure. For this kind of crossover to occur, a stock has to be in a strong bullish uptrend.

Now, as you can see, the 1-Month Price is still above the 10-Month SMA. That means the bullish trend is still in play!

As long as the 1-Month price remains above the 10-Month SMA, the stock is more likely to keep trading at new highs and should be purchased.

109.3% Profit Potential for O Option

Now, since O’s 1-Month Price is trading above the 10-Month SMA this means the stock’s bullish rally will likely continue. Let’s use the Hughes Optioneering calculator to look at the potential returns for an O call option purchase.

When you use the 1% Rule to select an O in-the-money option strike price, O stock only has to increase 1% for the option to breakeven and start profiting! Remember, if you purchase an at-the-money or out-of-the-money call option and the underlying stock closes flat at option expiration it will result in a 100% loss for your option trade! In this example, if O stock is flat at 60.18 at option expiration, it will only result in a 3.2% loss for the O option compared to a 100% loss for an at-the-money or out-of-the-money call option.

For this specific call option, the calculator analysis below reveals if O stock increases 5.0% at option expiration to 63.19 (circled), the call option would make 53.1% before commission.

If O stock increases 10.0% at option expiration to 66.20 (circled), the call option would make 109.3% before commission and outperform the stock return more than 10 to 1*.

The leverage provided by call options allows you to maximize potential returns on bullish stocks.

The Hughes Optioneering Team is here to help you identify profit opportunities just like this one.

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