Today I am going to walk you through a great potential trade. Not only will we look at which ticker is setting up, I will layout the amazing indicator that helped me spot this one and many others.
In this example chart of Dell Technologies, Inc. (DELL), the 10-Month Simple Moving Average is showing us what we need to know. It is a very powerful tool for spotting a significant trend in a stock. With that info, we can build a trade that fits right into our trading plan.
Grab DELL On This Move
The signal that we spotted is where DELL’s 1-month price crosses the 10-Month Simple Moving Average. This shows strong upside momentum that is still in play. To get more details on the 10-Month Simple Moving Average click here.
88.6% Profit Potential for DELL Trade
We have used the Hughes Optioneering Calculator to look at the potential returns for a Call Option Purchase. It figures out the profit/loss for this type of trade based on a flat DELL price to a 12.5% increase in underlying asset price at option expiration.
When you purchase a call option, there is no limit on the profit potential of the call if the underlying stock continues to move up in price.
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.
Nearly 9x the Return if DELL is up 10%
The calculator analysis above reveals if DELL stock increases 5.0% at option expiration to 77.58 (circled), the call option would make 43.0% before commission.
If DELL stock increases 10.0% at option expiration to 81.28 (circled), the call option would make 88.6% before commission and outperform the stock return nearly 9 to 1*.
The leverage provided by call options allows you to maximize potential returns on bullish stocks.
The Hughes Optioneering Team is here to help you identify winning trades just like this one.
Wishing You the Best in Investing Success,
Editor, Trade of the Day
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*Trading incurs risk and some people lose money trading.