Fresh 52-Week Highs for CBOE

Dear Reader,

Yesterday, we looked at a Monthly Price Chart of Eli Lilly & Co., noting the stock’s 1-Month Price is trading above the 10-Month SMA signaling a ‘Buy’.

For today’s Trade of the Day we will be looking at a Daily Price chart for CBOE Global Markets Inc. stock symbol: CBOE.

Before breaking down CBOE’s daily price chart let’s first review which products and services are offered by the company.

Cboe Global Markets, Inc. is one of the largest stock exchange operators by volume in the United States and a leading market globally for ETP trading. Cboe offers trading across a diverse range of products in multiple asset classes and geographies, including options, futures, U.S. and European equities, exchange-traded products, global foreign exchange and multi-asset volatility products based on the VIX Index.

Now, let’s begin to break down the Daily Price chart for CBOE. Below is a Daily Price Chart with the price line displayed by an OHLC bar.

Buy CBOE Stock

The Daily Price chart above shows that CBOE stock has been hitting new 52-Week Highs regularly since early August.

Simply put, a stock does not just continually hit a series of new 52-Week Highs unless it is in a very strong bullish trend.

The Hughes Optioneering team looks for stocks that are making a series of 52-Week Highs as this is a good indicator that the stock is in a powerful uptrend.

You see, after a stock makes a series of two or more 52-Week Highs, the stock typically continues its price uptrend and should be purchased.

Our initial price target for CBOE stock is 158.50 per share.

130.0% Profit Potential for CBOE Option

Now, since CBOE stock is currently making a series of new 52-Week Highs this means the stock’s bullish rally will likely continue. Let’s use the Hughes Optioneering calculator to look at the potential returns for a CBOE call option purchase.

The Call Option Calculator will calculate the profit/loss potential for a call option trade based on the price change of the underlying stock/ETF at option expiration in this example from a flat CBOE price to a 12.5% increase.

The Optioneering Team uses the 1% Rule to select an option strike price with a higher percentage of winning trades. In the following CBOE option example, we used the 1% Rule to select the CBOE option strike price but out of fairness to our paid option service subscribers we don’t list the strike price used in the profit/loss calculation.

Trade with Higher Accuracy

When you use the 1% Rule to select a CBOE in-the-money option strike price, CBOE stock only has to increase 1% for the option to breakeven and start profiting! Remember, if you purchase an at-the-money or out-of-the-money call option and the underlying stock closes flat at option expiration it will result in a 100% loss for your option trade! In this example, if CBOE stock is flat at 150.59 at option expiration, it will only result in a 5.0% loss for the CBOE option compared to a 100% loss for an at-the-money or out-of-the-money call option.

Using the 1% Rule to select an option strike price can result in a higher percentage of winning trades compared to at-the-money or out-of-the-money call options. This higher accuracy can give you the discipline needed to become a successful option trader and can help avoid 100% losses when trading options.

The goal of this example is to demonstrate the powerful profit potential available from trading options compared to stocks.

The prices and returns represented below were calculated based on the current stock and option pricing for CBOE on 8/21/2023 before commissions.

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.

For this specific call option, the calculator analysis below reveals if CBOE stock increases 5.0% at option expiration to 158.12 (circled), the call option would make 62.5% before commission.

If CBOE stock increases 10.0% at option expiration to 165.65 (circled), the call option would make 130.0% before commission and outperform the stock return 13 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 profit opportunities 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.

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Wishing You the Best in Investing Success,