Take a look at this trade. I wanted to get it to you ASAP so today’s article is short and to the point.
The 10-Month Simple Moving Average is an indicator that is excellent for spotting strong momentum in a stock with a great likelihood of continuing in that direction. Take a look at this chart of Uber Technologies, Inc. stock symbol: UBER.
As the chart shows, in January, the UBER 1-Month Price, crossed above the 10-Month simple moving average (SMA) shown as the blue line above.
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. Our initial price target for UBER is 69.50 per share.
Here Is The Best Part
By capitalizing on this powerful momentum with a Call Option Spread, you have the potential to make money if the stock goes up, goes down, or even stays flat! The Hughes Optioneering Calculator shows you what the call option trade would realize in up, down and flat scenarios before commissions.
If UBER is flat or up at all at expiration the spread will realize a 52.9% return (circled).
And if UBER decreases 7.5% at option expiration, the option spread would make a 30.9% return (circled).
Like I said, this is a quick note to put this example in front of you right away but don’t take short cuts when learning to trade options. There is the possibility of losing some or all of your investment so be sure to invest in yourself with good trading education. We offer many ways for traders like you to learn the best practices.
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Wishing You the Best in Investing Success,
Editor, Trade of the Day
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