Did you see this trade setup? Without this indicator, I wouldn’t have spotted it myself.

Today we will be looking at an On Balance Volume chart for McKesson Corp. (MCK). McKesson Corporation provides healthcare services in the United States and internationally. It operates through four segments: U.S. Pharmaceutical, Prescription Technology Solutions (RxTS), Medical-Surgical Solutions, and International.

Confirming a Price Uptrend with OBV

We can see from the OBV chart below that the On Balance Volume line for MCK is sloping up. An up-sloping line indicates that the volume is heavier on up days and buying pressure is exceeding selling pressure. Buying pressure must continue to exceed selling pressure in order to sustain a price uptrend. So, On Balance Volume is a simple indicator to use that confirms the price uptrend and its sustainability.

Confirmed ‘Buy’ Signal for MCK

Since MCK’s OBV line is sloping up, the most likely future price movement for MCK is up, making MCK a good candidate for a stock purchase or a call option spread. Today we are going to look at a potential call option spread for MCK.

The analysis reveals that if MCK stock is flat or up at all at expiration the spread will realize a 60.0% return (circled). 

And if MCK stock decreases 7.5% at option expiration, the option spread would make a 58.7% return (circled). 

Due to option pricing characteristics, this option spread has a ‘built in’ 60.0% profit potential when the trade was identified*.

Option spread trades can result in a higher percentage of winning trades compared to a directional option trade if you can profit when the underlying stock/ETF is up, down or flat.

A higher percentage of winning trades can give you the discipline needed to become a successful trader. 

The Hughes Optioneering Team is here to help you identify profit opportunities just like this one.

Unlock the Secrets of My Successful Trading

With the Options for Income Newsletter, you’ll gain access to:

-Multiple trade setups to view every week

-A brief analysis of the underlying’s trends

-A calculator breakdown of the setup

-Exclusive member-only website to view your edition

Our newsletter will guide you through the complex world of options trading, providing you with the tools and knowledge you need to learn more about this strategies. Click here to sign up now!

Wishing You the Best in Investing Success,

Chuck Hughes

Editor, Trade of the Day

Have any questions? Email us at dailytrade@chuckstod.com

*Trading incurs risk and some people lose money trading.