Sometimes, the trade entry signal we are waiting for turns into an incredibly profitable trade.  It doesn’t always work out that way, but it certainly did last week.

Last week, we discussed that Ford (stock symbol F) had just crossed the 200-Day Moving Average and may be setting up for something special.  Well, when we look at the chart, we can see why that was a timely call:

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Ford swung through the 200-Day Moving Average and then spiked.  And when you know the technical signal as well as the options market setup, that’s something that can generate great leverage for a trade.  All you need is an entry point and an idea of how you plan to execute!

But what’s next?  That’s the obvious question for every options and directional stock trader out there?  We’ve had a run in the overall markets, so is there something that we can look to leverage in the next leg of the move?

For me, I’ll stay with the idea of transportation and move from the highways to the skyways.  We’ve had some crazy upside in the airline industry, but one of them in particular has me seeing hearts.  Let’s look at Southwest Airlines (stock symbol LUV):

Similar to the Ford move, LUV just finally broke through a key moving average a couple of days ago.  In LUV’s case, it was the 50-Day Moving Average providing resistance.  But after less than a week, LUV is now pushing through the 100-Day Moving Average.  There’s clearly upside here as LUV is still trading well below the levels of earlier this year, and with options trading at a cheap level, I can get a lot of leverage and defined risk for this type of trade.

This is exactly why I put out my outlier watch list every week – I need to be ready for the trades that are a matter of hours away, a matter of days away, or maybe a few weeks away from coming to fruition.  But, there’s always leverage available in the options market to time my entries!  Whether I’m looking at Ford, Southwest Airlines, or any other company’s stock chart, I always go through my trade checklist, find the best way to leverage the move, and have my homework done BEFORE it’s due so I can sit back, relax, and simply execute the trade with the best risk/reward profile in a timely manner.

So please go to to review how I traditionally apply technical signals, volatility analysis, and probability analysis to my options trades.  As always, if you have any questions, never hesitate to reach out.

Keith Harwood