June 24th, 2022

Dear Reader,

Yesterday, we looked at a Daily Price Chart of Home Depot, Inc., noting that the stock has been making a series of new 52-Week Lows.

For today’s Trade of the Day e-letter we will be looking at a monthly chart for Cytokinetics Inc. stock symbol: CYTK.

Before breaking down CYTK’s monthly chart let’s first review what products and services the company offers.

Cytokinetics, Incorporated, a late-stage biopharmaceutical company, focuses on discovering, developing, and commercializing muscle activators and inhibitors as potential treatments for debilitating diseases. The company develops small molecule drug candidates primarily engineered to impact muscle function and contractility.  

Now, let’s begin to break down the monthly chart for CYTK stock.

Below is a 10-Month Simple Moving Average chart for Cytokinetics Inc.

Buy CYTK Stock

As the chart shows, in July 2021, the CYTK 1-Month Price, crossed above the 10-Month simple moving average (SMA).

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

Now, as you can see, the 1-Month Price is still above the 10-Month SMA. That means the bullish trend is still in play! 

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 CYTK is 49.85 per share.

Profit if CYTK Is Down 10%

Now, since CYTK’s 1-Month Price is trading above the 10-Month SMA and will likely rally from here, let’s use the Optioneering calculator to look at the potential returns for a CYTK covered call trade. Covered calls are also known as buy writes.

The Buy Write Calculator will calculate the profit/loss potential for a covered call trade based on the price change of the underlying stock/ETF at option expiration in this example from a 10.0% increase to a 10.0% decrease in CYTK stock at option expiration.

The goal of this example is to demonstrate the ‘built in’ profit potential for covered calls and the ability of covered calls to profit if the underlying stock is up, down or flat at option expiration. Out of fairness to our paid option service subscribers we don’t list the option strike price used in the profit/loss calculation.

The prices and returns represented below were calculated based on the current stock and option pricing for CYTK on 6/23/2022 before commissions.

Built in Profit Potential

For this covered call, the calculator analysis below reveals the cost or the breakeven price is $3,747 (circled). The maximum risk for a covered call is the cost of the covered call.

The analysis reveals that if CYTK is flat at 47.47 or up at all at expiration the covered call will realize a $953.00 profit and a 25.4% return (circled).

If CYTK decreases 5.0% at option expiration, the covered call will realize a $762.65 profit and a 20.4% return.

And if CYTK decreases 10.0% at option expiration, the covered call will realize a $525.30 profit and a 14.0% return.

Due to option pricing characteristics, this covered call has a ‘built in’ 25.4% profit potential when the trade was initiated.

Covered call trades can result in a higher percentage of winning trades compared to a directional stock 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 Optioneering Team is here to help you identify winning trades just like this one.

Interested in accessing the Optioneering Calculators? Join one of Chuck’s Trading Services for unlimited access! The Optioneering Team has option calculators for six different option strategies that allow you to calculate the profit potential for an option trade before you take the trade.

Average Trade Return of 193.5%

Below is a screenshot of the current open trade profit opportunities for covered call trades from Chuck’s Weekly Option Alert Covered Call Portfolios. There are currently $113,694.00 in open trade profits with an average trade return of 193.5% demonstrating the ability of the Optioneering Strategy to deliver substantial returns with no losing trades*.

*Trading incurs risk and may not be suitable for all investors. You may lose money trading.

Hughes Optioneering Strategies Perform In All Markets

This isn’t Chuck’s first bear market…

Over the past 20+ years, Chuck’s strategies have proven to perform, even in the most volatile markets.

His strategies championed market corrections, the Dot-Com Crash, and the 2008 Great Recession.

This is your chance to gain access to his proven strategies and start receiving hand-picked trades from 10-Time Trading Champion!

Just call Brad at 1-866-661-5664 or 1-310-647-5664 to join and use the code “Optioneering VIP” to receive special pricing.

You can also CLICK HERE to schedule a call! 

Wishing You the Best in Investing Success,

Chuck Hughes

Editor, Trade of the Day

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

DISCLAIMER: The information provided by the Legacy Publishing LLC (“Legacy”)  Trading Services, newsletters and educational publications (“Services”) is not customized or personalized to any particular risk profile or tolerance. Nor is the information published by Legacy  a customized or personalized recommendation to buy, sell, hold, or invest in particular financial products. Past performance is not necessarily indicative of future results. Please note that results may not be typical and can vary from person to person. There are inherent risks involved with investing in the stock and options market, including the loss of your investment. Any investment is at your own risk. You should only trade or invest your “risk capital” – money you can afford to lose. Trading stocks and stock options involves high risk, and you can lose the entire principal amount invested or more. There is no guarantee that systems, indicators, or trading signals will result in profits or that they will not produce losses. Chuck Hughes’ profit results are not typical. Chuck Hughes is an experienced investor, and your results will vary depending on risk tolerance, amount of risk capital utilized, size of trading position, willingness to follow the rules and other factors. The actual profit results presented here may vary with the actual profit results presented in other Legacy publications due to the different strategies and time frames presented in other publications. Trading on margin carries a high level of risk and may not be suitable for all investors. Other than the refund policy detailed elsewhere, Legacy does not make any guarantee or other promise as to any results that may be obtained from using the Services. Open trade profit snapshots of Chuck Hughes’ trading accounts represent the open trade profit performance for the trade(s) or the portfolio displayed on the day the snapshot was taken. Open trade profits may have increased or decreased when trades were closed out. Other strategies may not have been profitable during the same time period the open trade profits were displayed. In order to avoid a conflict of interest, Trading Service recommendations were not executed by Chuck Hughes or his associates. The trade entry and exit prices (and resulting profit/loss) represent the price of the security at the time the recommendation was disseminated. Trading Service profits are not based on actual trades and have certain limitations. Because the Trading Service trades have not actually been executed, the results may understate or overstate the impact of certain market factors, such as lack of liquidity. Also, the Trading Service results do not include the costs of subscriptions, commissions, or other fees. No representation is being made that you will achieve profits or the same results as any person providing a testimonial. Testimonials may relate to various other products offered by Legacy Publishing and not the product offered here, but all of these products are based on Chuck Hughes’ system. Performance results of other products described in such testimonials may be different from results for the product being offered and may have been achieved before the product being offered was developed. Results described in testimonials from other products or the product being offered may not be typical or representative of results achieved by other users of such products. No representation is being made that any of the persons who provide testimonials have continued to experience the same level of profitable trading after the date on which the testimonial was provided. In fact, such persons may have experienced losses thereafter or may have experienced losses preceding the period of time referenced in the testimonial. Cash Payout trades receive cash credits from the sale of option premiums. The net profits for Cash Payout trades may be less than the cash received for the sale of the option premium. Some cash income figures presented represent the total amount of option premium collected during the referenced period. Actual profits were less.  Auto-trading, or any broker or advisor-directed type of trading, is not supported or endorsed by Legacy Publishing LLC. For additional information on auto-trading, you may visit the SEC’s website: All About Auto-Trading, https://www.sec.gov/reportspubs/investor-publications/investorpubsautotradinghtm.html