Dear Reader,

For today’s Trade of the Day e-letter we will be looking at a daily price chart for TransDigm Group Inc. stock (TDG). TransDigm Group, through its wholly-owned subsidiaries, is a leading global designer, producer and supplier of highly engineered aircraft components for use on nearly all commercial and military aircraft in service today. 

Now, let’s begin to break down the Daily Price chart for TDG stock. Take a look at the chart below.

50-Day EMA and 100-Day EMA ‘Buy’ Signal

The 50-Day Exponential Moving Average (EMA) and 100-Day EMA are moving average indicator lines that can provide buy and sell signals when used together. When the shorter-term 50-Day EMA crosses above or below the longer-term 100-Day EMA, this provides either a buy or sell signal depending on which direction the stock price is moving.

  • 50-Day EMA line Above 100-Day EMA = Price Uptrend = Buy signal

When the 50-Day EMA (blue line) crosses above the 100-Day EMA (red line) this indicates that the stock’s buying pressure has begun to outweigh the selling pressure signaling a ‘buy’ signal.

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Buy TDG Stock

As the chart shows, on November 18th, 2022, the TDG 50-Day EMA, crossed above the 100-Day EMA.

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

Now, as you can see, the 50-Day EMA is still above the 100-Day EMA meaning the ‘buy’ signal is still in play.

Now, since TDG’s 50-Day EMA is trading above the 100-Day EMA and will likely rally from here, let’s use the Hughes Optioneering calculator to look at the potential returns for a TDG call option spread.

The Call Option Spread Calculator will calculate the profit/loss potential for a call option spread based on the price change of the underlying stock/ETF at option expiration in this example from a 7.5% increase to a 7.5% decrease in TDG stock at option expiration.

The analysis reveals that if TDG stock is flat or up at all at expiration the spread will realize a 50.4% return (circled). 

And if TDG stock decreases 7.5% at option expiration, the option spread would make a 39.1% return (circled). 

Due to option pricing characteristics, this option spread has a ‘built in’ 50.4% profit potential when the trade was identified*.

Option spread trades can result in a higher percentage of winning trades compared to a directional option trade if you can profit when the underlying stock/ETF is up, down or flat.

A higher percentage of winning trades can give you the discipline needed to become a successful trader. 

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

Trade High Priced Stocks for $350 With Less Risk

One of the big advantages to trading option spreads is that spreads allow you to trade high price stocks like Amazon, Google, or Netflix for as little as $350. With an option spread you can control 100 shares of Netflix for $350. If you were to purchase 100 shares of Netflix at current prices it would cost about $55,000. With the stock purchase you are risking $55,000 but with a Netflix option spread that costs $350 your maximum risk is $350 so your dollar risk is lower with option spreads compared to stock purchases.

Chuck’s $3,000 Trading Scholarship

I don’t want you to miss a single opportunity to potentially reach your goals. That’s why I’d like to offer you a scholarship of the full $3,000 Enrollment Fee of my exclusive Inner Circle Trading Service**.

I want you to follow in my footsteps for the opportunity to succeed beyond your wildest dreams, so please call Brad in my office at 1-866-661-5664 or 1-310-647-5664 and get started today!

You can also CLICK HERE to schedule a call now!

Wishing You the Best in Investing Success,

Chuck Hughes

Editor, Trade of the Day

Have any questions? Email us at dailytrade@chuckstod.com

*Trading incurs risk and some people lose money trading.

**Inner Circle Trading Service program provides training package and specific trade signals for one year. The first 10 people to sign up each day this offer is valid, will get a waiver of the standard fee, which is the price charged to anyone signing up after the first 10 people per day.