FTI Jumps into the ‘Buy Zone’

Dear Reader,

Yesterday, we looked at a Daily Price Chart of ModivCare Inc., noting the stock’s 50-Day EMA is trading below the 100-Day EMA signaling a ‘Sell’.

For today’s Trade of the Day we will be looking at a Keltner Channel chart for TechnipFMC plc stock symbol: FTI.

Before breaking down FTI’s daily Keltner Channel chart let’s first review which products and services are offered by the company.

TechnipFMC plc engages in the oil and gas projects, technologies, and systems and services businesses in Europe, Central Asia, North and Latin America, the Asia Pacific, Africa, and the Middle East. The Subsea segment engages in the design, engineering, procurement, manufacturing, fabrication, installation, and life of field services for subsea systems, subsea field infrastructure, and subsea pipe systems used in oil and gas production and transportation.

Now, let’s begin to break down the Keltner Channel chart for FTI. Below is a Daily Price Chart and the three Keltner Channels for FTI stock.

Buy FTI Stock

The Hughes Optioneering Team uses the Keltner Channels as an indicator to determine whether a stock is overbought or oversold. If a stock’s daily stock price is trading above the upper Keltner Channel, this signals that the stock is temporarily overbought and subject to a retracement.

Even stocks that are in the strongest bull trends do not advance in a straight line. There are always price retracements along the way. When a stock becomes overbought, it’s price will typically decline soon after as the inevitable profit taking occurs.

The FTI daily price chart shows that the stock is in a strong price uptrend and has become overbought several times. You can see this as FTI has traded above the Upper Keltner Channel on multiple occasions recently.

But, in every scenario when FTI became overbought, the stock soon experienced a pullback.

Finding opportunities when a stock experiences a pullback is why the Hughes Optioneering Team uses the Keltner Channels. They help us find a lower-risk entry point.

The Keltner Channel “Buy Zone” occurs when a stock is trading below the upper Keltner Channel. Once the daily price is trading below the upper channel, it provides a lower-risk buying opportunity as the stock is likely to rally.

Our initial price target for FTI stock is 14.00 per share.

63.5% Profit Potential for FTI Option

Now, since FTI stock is currently trading in the Keltner Channel ‘Buy Zone’ this offers us a prime trade entry opportunity. Let’s use the Hughes Optioneering calculator to look at the potential returns for a FTI call option purchase.

The Call Option Calculator will calculate the profit/loss potential for a call option trade based on the price change of the underlying stock/ETF at option expiration in this example from a flat FTI price to a 12.5% increase.

The Optioneering Team uses the 1% Rule to select an option strike price with a higher percentage of winning trades. In the following FTI option example, we used the 1% Rule to select the FTI option strike price but out of fairness to our paid option service subscribers we don’t list the strike price used in the profit/loss calculation.

Trade with Higher Accuracy

When you use the 1% Rule to select a FTI in-the-money option strike price, FTI 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 FTI stock is flat at 12.75 at option expiration, it will only result in a 5.4% loss for the FTI option compared to a 100% loss for an at-the-money or out-of-the-money call option.

Using the 1% Rule to select an option strike price can result in a higher percentage of winning trades compared to at-the-money or out-of-the-money call options. This higher accuracy can give you the discipline needed to become a successful option trader and can help avoid 100% losses when trading options.

The goal of this example is to demonstrate the powerful profit potential available from trading options compared to stocks.

The prices and returns represented below were calculated based on the current stock and option pricing for FTI on 12/2/2022 before commissions.

When you purchase a call option, there is no limit on the profit potential of the call if the underlying stock continues to move up in price.

For this specific call option, the calculator analysis below reveals if FTI stock increases 5.0% at option expiration to 13.39 (circled), the call option would make 29.1% before commission.

If FTI stock increases 10.0% at option expiration to 14.03 (circled), the call option would make 63.5% before commission and outperform the stock return more than 6 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.

Interested in accessing the Optioneering Calculators? Join one of Chuck’s Trading Services for unlimited access! The Optioneering Team has option calculators for six different option strategies that allow you to calculate the profit potential for an option trade before you take the trade.

Get Trade Insights Directly From Chuck

You can start getting market insights directly from 10-Time Trading Champion Chuck Hughes.

See what he’s trading and when with his exclusive Inner Circle Trading Service where he will send you his hand-picked stock and option trades.

Just call Brad at 1-866-661-5664 or 1-310-647-5664 to join or CLICK HERE to schedule a call!

Wishing You the Best in Investing Success,