APO: Strong Trend for Private Equity Giant

Dear Reader,

While I was watching the markets and today’s trading action, when I came across this one stock in particular, what I saw piqued my interest.

The trade that came over the wire just a few hours ago was for Apollo Global Management LLC symbol: (APO).

It’s what I saw in APO’s stock chart that made this potential trade stand above the rest when I saw it today.

Take a look below at a current snapshot of APO’s stock chart and I’ll break down for you what I see when I see this chart.

When looking at this stock chart for Apollo Global Management LLC, the first thing that stands out to me is the powerful technical ‘Buy’ signal that is currently flashing!

In this daily price chart, you can see there are also two Exponential Moving Averages (EMA) overlaid. The shorter term line is the 50-Day EMA and the longer term line is the 100-Day EMA.

The chart shows that in May ‘23, as APO stock was beginning to gain steam and trade higher, the stock’s 50-Day EMA crossed above the 100-Day EMA. This created a brand new technical ‘Buy’ signal for APO shares.

When I come across a technical signal like this, I consider it a ‘Buy’ because the shorter term EMA is beginning to outpace the longer term EMA which is indicative of a sustained move higher.

In order for an EMA crossover like this to occur, strong buying pressure has to be generated for a stock, driving the shares higher. An EMA trading system like the 50/100-Day EMA system, is able to identify these sustained momentum thrusts when the crossover occurs offering traders an opportunity to jump in and participate in the move.

Now, even though the original crossover occurred a few months back, this does not mean it is too late to capitalize on the stock’s bullish trend. When stocks break out to the upside like this, the bullish trend can often last longer than one might think.

Since the 50-Day EMA is still trading above the 100-Day EMA, this means the ‘Buy’ signal is still intact and this trend is still tradable. Since this bullish trend is still in play, let’s discuss how I would look to place a trade on APO stock.

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How I Would Look to Trade It

Since APO’s 50-Day EMA is still trading above the 100-Day EMA signaling the ‘Buy’, this is offering an attractive trading setup.

I want to look to trade APO’s trend and have the opportunity to capture some profits by placing an options trade on the stock.

Below is a Call Option Debit spread for APO that I found just this morning that would allow me to gain some exposure to the stock’s powerful bullish trend but also have some downside protection built in as well. Let me tell you how this works.

Once I place a Call Option Debit spread, it has the ability to profit if the underlying stock/ETF is either up, flat, or even down a bit at option expiration.

Below is a snapshot of my Call Option Debit Spread Calculator that shows the profit potential and downside protection analysis for my trade. This example examines a range of a 10.0% increase to a 10.0% decrease in APO share price at option expiration.

Looking at the trade analysis, the calculator shows that this one single trade, that would cost you only $295 to enter, has the ability to profit 69.5%.

The calculator reveals that if APO, at option expiration, were to increase, remain flat, or even drop by as much as 5.0%, this low-cost trade would be set up to make a 69.5% return!

This Call Option Debit Spread strategy has been one of my absolute favorites to trade over the years and remains so today. The key behind it all is that by enabling your ability to profit if a stock is up, flat, or even down a bit gives you a much higher probability that your trade will end up a winner.

The Hughes Optioneering Team is here to help you identify high-probability trades just like this one.

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