When you see a great trade happen you want to know how. Why did they pick that stock or that option? How did they determine the trend? How did they set an entry and exit?
Most important is to determine if the process is repeatable.
A lot of traders send me their alerts and I get to scan through many strategies, trades and results. I love to find one that checks off all of the boxes.
Wendy Kirkland sent over a trade the other day and layed it all out.
From Wendy’s Daily Profit Play:
The 8 EMA nearly touched the 21 EMA and if both remain above the 55 EMA, the uptrend will be confirmed.
To buy shares of SLB today would cost approximately $32.80 per share. If price rises up to the target, the profit would be $7.20 per share or 22%. Not bad for a move that may happen over a short period of time.
Option trading offers the potential of a lower initial investment and higher percentage gain. Let’s take a look.
If you bought 20 shares of SLB at $32.80, you would invest a total of $656. If it increased in price to $40, you would earn a profit of $7.20 or $144 for the 20 shares or 22% – not bad if it rises in a few weeks.
If you bought one option contract covering 100 shares of SLB’s stock with a June 25th expiration date for the 40 strike and premium would be approximately $.28 today as I write, or $28 per contract. If price increased the expected $7.20 over the next number of weeks, the premium would increase approximately $7.20 to $7.48. This is a gain of $7.20 or $720 for the contract or 2571%. That is pretty amazing in a short period of time and shows the leverage of option trading.
For the same approximate investment, you could purchase 25 contracts. $28 x 25 equals $625.
Options often offer a smaller overall investment, covering more shares of stock and potential for greater profits.
Remember, you can take profit anywhere along the line, you don’t have to wait for the expiration date to sell.
EMAs and line crosses are at the heart of most of my strategies. Many strategies come with a weekly newsletter listing numerous potential trade candidates.
Talk about teaching you how to fish!!! And this doesn’t even include the full, detailed explanation she provided about the indicators.
And the best part is that is is completely repeatable. If you want to take the lessons and apply them yourself or you can let Wendy send you the trades she is spotting.
Keep learning and trade wisely,
Market Wealth Daily