Tuesday, October 12th 2021
Happy Thankful Tuesday!
I am excited to share that you don’t need special education or to sit in front of the computer all day to trade options. It can be easily learned if you are interested in spending an hour or so a week earning money in what could be considered “renting” stocks for a short period of time.
This is why I show you the details about an equity’s symbol and pattern each week.
I am typing this on Sunday, before the new week starts. Last week, the Dow was up 3 days out of 5. Many (most) stocks pulled back through throughout the week and by Friday started to recover, so the indices were up by a little at the close of the week. It is hard to know if the drop is over as the indices have hit support levels that have held in the past. The last quarter of the year as we head into October is traditionally a positive quarter.
For the updates on previously discussed symbols, please scroll down.
For today’s Trade of the Day, we will be looking at Prudential Financial, Inc. symbol (PRU).
Before analyzing PRU’s chart, let’s take a closer look at the company and its services.
Prudential Financial, Inc., together with its subsidiaries, provides insurance, investment management, and other financial products and services in the United States and internationally. The company develops and distributes individual variable and fixed annuity products, principally to the mass affluent and affluent markets; and individual variable, term, and universal life insurance products to the mass middle, mass affluent, and affluent markets in the United States. In addition, it provides third-party life, health, Medicare, property and casualty, and personal finance products to retail shoppers through its digital and independent agent channels. The company offers its products and services to individual and institutional customers through its proprietary and third-party distribution networks.
Prudential Financial, Inc. was founded in 1875 and is headquartered in Newark, New Jersey.
Each candle on the chart represents price movement over a 5-day (week) period. The indicator at the bottom of the chart is a Channel Commodity Index (CCI).
I drew a line below the candles, if price stays above that line, the upward trend should continue. Watch for a continued rise toward its target.
A cross down through the CCI zero or -100 line is bearish, in that it is suggesting price has gone from bearish to even more bearish. A cross up through the zero line and a cross through 100, suggests price is bullish. If you want to learn more about the CCI, you can read through the short section below or you can scroll down to the alert signal.
Channel Commodity Index
A cross up and over the CCI -100 or the zero line can issue an entry signal as it moves from being bearish to bullish. A rise toward 100 is a continuation of that bullishness. Up through the 100 line creates a green fin of bullishness, until it drops back down through the 100-line.
Also, a pullback and then, as it heads back up is another bullish indicator.
A break below the zero line means it has gone from bullish to bearish and a drop below -100 suggests even more bearishness.
The Commodity Channel Index (CCI) is a versatile indicator that can be used to identify a new trend or warn of extreme conditions. Originally, it was developed to identify cyclical turns in commodities, but the indicator can be successfully applied to indices, ETFs, stocks and other securities. In general, CCI measures the current price level relative to an average price level over a given period. CCI is relatively high when prices are far above their average but is relatively low when prices are far below their average. In this manner, CCI can be used to identify overbought and oversold levels or breaks from one level to another.
Check Out How This Rise in Price Could Pay Out Big Time
PRU is bullish as it rises further above the 100 line. This week’s candle is apt to continue its upward movement that could take it higher. We are looking for a continued rise above the CCI 100 line and up to a price of 110 before considering entry and then higher. The target is $115.
If you find that you like the CCI Indicator as an easy-to-read indicator, it is included in the 5-Star Academy educational program which includes a chatroom where I am during the day to do live teaching sessions on M-W-F and to answer questions during the day. It is an incredibly supportive community.
Potential Profit Play for
If PRU’s price continues to move up, you could consider a Call trade. I am writing this on Sunday, if price continues to rise above 110 when you receive this on Tuesday, you could consider a call option trade. We are expecting the CCI indicator to continue rising further above the 100 line.
Price is currently at approximately $110 as I write over the weekend and is expected to continue heading up to perhaps, hit the target of $115 and then higher.
If price doesn’t stay above $110, don’t consider a trade.
If the CCI line stays above the 100 line and then, continues up, price will continue its current uptrend and continue to rise. We will keep an eye on it over the course of the next few weeks.
The short-term price target for PRU is $115 and, perhaps, higher.
To buy shares of Prudential (PRU) stock today would cost approximately $110 per share.
I am suggesting that PRU’s price may rise to $115.
Option trading offers the potential of a lower initial investment and higher percentage gain. It is like renting stock versus buying out right. Let’s take a look.
If you bought 6 shares of PRU at $110, total investment $660 and it increased in price to $115, it would result in a profit of $5 or $30 for 6 shares or an 4.5% gain.
If you bought one Call option contract covering 100 shares of PRUs’ stock with a Nov 19th (Nov 21st) expiration date for the 115 strike, the premium would be approximately 1.60 per share or a total of $160 for the contract of 100 shares. If price increased the expected $5 over the next few weeks to $115 target, the premium would increase approximately $3 to $4.60. This is a gain of $300 on your $160 investment or 187% profit. That would be a terrific trade!
It is exciting to make money if price rises or falls.
I want to remind you that you can sell to close and take profit any time along the line before the expiration date. You don’t have to hold the contract until expiration.
Options often offer a smaller overall investment, covering more shares of stock and potential for greater profits. This is like renting stocks versus having to pay full price to buy.
This said, if you are having any kind of trouble taking advantage of these trades, we don’t want you to miss out. I have put together programs that help traders just like you access the potential profits that options provide. Be sure to check out the programs (like 5-Star Academy mentioned earlier) shared in this email and we will make it easy for you to get your share.
I love to trade, and I love to teach. It is my thing.
Yours for a prosperous future,
PS-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 are 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. If you are interested in learning how to apply these tools and increase the potential of each trade, click here to learn more.
Previous Equities discuss:
Two weeks ago, we studied CRM with an October 15th (Oct 21) expiration and a 300 strike price and premium of 2.24. With the drop in the indices on Monday through Thursday, there would have been no trade since it never made it up to 286.
Last week, we discussed TSLA and an Oct 22nd (Oct wk 4) expiration, an 800 strike and a premium of 22.45. On Wednesday the 6th, the premium rose to 43.73 or a gain of 95% in one day. Premium as I type has fallen back a little to 37.00 or a profit of 65%- still an awesome trade.