Did you spot this potential trade? If I hadn’t dialed in my options tools, I may have missed it as well. You may recognize the company we are looking at today, Wells Fargo & Co. (WFC). Even if you don’t, what you really need to know is what I spotted on WFC’s chart today.

MACD Indicator confirms Price Momentum

The WFC daily price chart below shows that WFC is in a price uptrend as the 24/52 day MACD line (black line) is above the 18-Day EMA (purple line). The Moving Average Convergence/ Divergence chart is shown below the daily price chart.

The 18-Day EMA line functions as a buy/sell ‘trigger’. When the 24/52 Day MACD line crosses above the 18-Day EMA line it indicates positive momentum and higher prices for the stock. This creates a ‘Buy’ signal.

Buy WFC Stock

As long as the 24/52 Day MACD line remains above the 18-Day EMA, the stock is more likely to keep trading at new highs in the coming days and weeks.

Now, since WFC’s 24/52 Day MACD is trading above the 18-Day EMA 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 WFC call option purchase.

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 WFC stock increases 5.0% at option expiration to 58.60 (circled), the call option would make 43.8% before commission. 

If WFC stock increases 10.0% at option expiration to 61.39 (circled), the call option would make 90.5% before commission and outperform the stock return more than 9 to 1*. 

Interested in accessing the Optioneering Calculators? Join Chuck’s Wealth Creation Alliance 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.

Supercharge Your Profit Potential with Options

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.

Wishing You the Best in Investing Success,

Chuck Hughes

Editor, Trade of the Day

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