When I am looking for a great trade that has the potential to really explode in the direction, I want it to, I have a favorite indicator that I rely on. Here is an example of a trade that this reliable signal provider helped me uncover in today’s market.

Advanced Micro Devices, Inc. symbol (AMD) caught my eye when I looked at the Commodity Channel Index (CCI) on the bottom of the chart. The areas on the CCI that look like fins are what caught my attention. To learn more about CCI, click here. Take a look and I will explain how this example can work below:

If you want to be a profit predator, this pattern is the key. See how to spot it here

On the CCI indicator below the AMD chart, notice how the line is BELOW the 0 which is bearish territory.  This signals bearish moves with the thought that price may move down.

We want CCI on to go down to create a fin shape. We also want the price to go below $156 before entering a trade. The first target would be $150.

Here Is How This Could Be Lucrative in This Example

To buy stock shares of AMD today, price would be approximately $156.65. You would wait until price found a bottom before buying stock.

That said, option trading offers the potential of a smaller initial investment and higher percentage gain even when price is expected to rise or fall. Let’s take a look.

If you bought one Put option contract covering 100 shares of AMD’s stock with a May 17th expiration date for the 155 strike, premium would be approximately $8.30 today, or a total of $830 per contract.  If the stock price FELL the expected $6 the premium might increase approximately $3.00 to $1230 per share on your 100-share contract. This is a 36% gain over a couple of weeks.

Remember you can close an option trade anywhere along the line before expiration to take gains or stop a loss.

If you are interested in getting my guide to spotting this “fins” just click here.

I have created this daily letter to help you see the great potential you can realize by trading options. Being able to recognize these set ups is a key first step in generating wealth with options. Once you are in a trade, there is a huge range of tools that can be used to manage the many possibilities that can present themselves throughout the trade to earn and take profit or prevent a loss. Lots of fun things to learn and fine-tune.

I wish you the very best,

Wendy

If you want to be a profit predator, this pattern is the key. See how to spot it here

Past potential trade update:

Last week we discussed buying HD Puts. On 4-12 the May 17th 345 put was $5.20. You could have sold on 4-17 for $11.60, a 123% profit.