Fridays are our chance to head into the weekend with a trading win. Take a look below at what we have spotted.
Great trades are always out there and I am going to help you find them as easily as possible. By reading through articles like this you can learn how to generate an income stream that beats a side hustle by a huge margin.
The market was up 3 out of 5 days last week. I am typing this on Wednesday, and you won’t get this until Friday. A lot can change in a couple days.
For today’s Trade of the Day, we will be looking at lululemon athletica inc. (LULU).
Keep reading to see a potential trade I spotted in LULU that could return 157%.
Let’s look at LULU’s weekly chart.
The ADX +DI (green line) is close to crossing the -DI and the black ADX line is curling up. As long as the +DI is above the -DI, price should rise. The past two weekly candles are positive. If you want to learn more about ADX, read on or, if not, scroll down to the alert.
Average Direction Index (ADX) – Strength Indicator
The Average Directional Index consists of 3 lines: Green, Red and Black.
Green = +DI (Bullish)
Red = -DI (Bearish)
Black = ADX Strength Line
The DI line that is on top is in control. If the ADX line is heading up, strength is supporting the DI line that is on top and in control.
Each candle on the chart represents price movement over a 5-day (week) period; therefore, it takes weeks for trades to play out. When the -DI crosses over the +DI line, it gives a buy signal for Puts as the -DI line (red) appears as if it is in control and rising to head up on the ADX indicator, and as the ADX turns up that is even more bearish, suggesting a downward move is gaining strength. When the +DI (green line) crosses the red and the black line points up it shows an upward trend and Calls can be considered.
LULU’s Potential Trade – Showing Strength
This signal could give a quick payout if it continues its upward move, and the strength of this pattern continues. I am typing this on Wednesday and LULU costs about $385. If LULU’s price moves above $390 and the + DI (green line) is above the -DI with the black line heading up you could consider a Call trade. The short-term price target for LULU is $420 and then, perhaps, higher. With the swings in past months, I am suggesting small profit targets until a market trend starts again.
Option trading offers the potential of a lower initial investment and higher percentage gain. Let’s take a look and make a comparison.
If you bought 1 share of LULU it would cost about $385. If price hit the expected $420 target that would be a $35 profit. That is not much profit on a $385 investment.
If you bought 1 Call option covering 100 shares of LULU with a April 29th expiration date for the 400 strike the premium would be approximately $11.15 today or $1115 for 1 option. If price rose to $420 over the next few weeks, the premium would likely increase $17 giving $1700 profit on your $1115 investment, this is a 152% gain.
Trading options is a win, win, win opportunity. Options often offer a smaller overall investment, covering more shares of stock and potential for greater profits.
I like to stress when trading options, you don’t need to wait for the expiration date to close the trade. You can close anywhere along the way prior to the expiration date. It is never a bad idea to take profit.
Trading options is like renting stocks for a fixed period of time. The potential to generate steady income with options is real and it can be transforming. Watch this video to learn how you can use option trading to achieve financial freedom. click here
Yours for a properous future,
Past Equity Candidates:
Last week we discussed buying BMY April 14th 72 Calls. On 3/25 the premium was $1.81. As of today (3/30) the premium is $1.80. We will watch this for another week.