I just spotted a signal from one of my most reliable indicators. Let me take you through how I spotted it and what it could potentially turn into.

Finding a stock with strong upside momentum can create a winning trade environment. When you know conditions are right for trading, you can set up a trade that fits your personal risk and profit profile. While trading always includes a risk of loss, our goal is to look for trades that help to manage as much of that risk as possible.

This is why I like On Balance Volume Charts and especially when they highlight patterns like we are seeing in CrowdStrike Holdings, Inc. (CRWD). Check out the chart below.

Confirm the Trend with OBV

On Balance Volume measures volume flow with a single Easy-to-Read Line. Volume flow precedes price movement and helps sustain the price uptrend. When a stock closes up, volume is added to the line.

We can see from the OBV chart below that the On Balance Volume line for CRWD is sloping up. An up-sloping line indicates that the volume is heavier on up days and buying pressure is exceeding selling pressure.

Since CRWD’s OBV line is sloping up, the most likely future price movement for CRWD is up, making CRWD a good candidate for a stock purchase or a call option spread.

Let’s use the Hughes Optioneering calculator to look at the potential returns for a CRWD debit spread.

For this option spread, the calculator analysis below reveals the cost of the spread is $595 (circled). The maximum risk for an option spread is the cost of the spread.

The analysis reveals that if CRWD stock is flat, up, at all, or down 7.5% at expiration the spread will realize a 68.1% return (circled). 

The prices and returns represented below were calculated based on the current stock and option pricing for CRWD on 3/18/2024 before commissions.

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Due to option pricing characteristics, this option spread has a ‘built in’ 68.1% 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.

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Members will receive hand-picked options trades from the 10-Time Trading Champion, Chuck Hughes.

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Wishing You the Best in Investing Success,