PGR: Resilient ‘Buy’ Trend Identified

Dear Reader,

Yesterday, we looked at a Daily Price Chart of Raytheon Technologies Corp., noting that RTX’s 50-Day EMA is trading above the 100-Day EMA signaling a ‘Buy’.

For today’s Trade of the Day we will be looking at a Daily Price chart for Progressive Corp. stock symbol: PGR.

Before breaking down PGR’s daily price chart let’s first review which products and services are offered by the company.

The Progressive Corporation is one of the major auto insurers in the country. Progressive is a leading independent agency writer of private passenger auto coverage, and the market share leader for the motorcycle products since 1998. Their Personal Lines segment writes insurance for private passenger automobiles, recreational and other vehicles.

Now, let’s begin to break down the Daily Price chart for PGR. Below is a Daily Price Chart with the price line displayed by an OHLC bar.

Buy PGR Stock

The Daily Price chart above shows that PGR stock began reaching a series of higher highs and higher lows since January.

This pattern of bullish trading suggests the stock will march on to a further advance.

You see, after a stock makes a series of two or more higher highs and higher lows, the stock typically continues its price up trend and should be purchased.

Our initial price target for PGR stock is 216.85 per share.

92.6% Profit Potential for PGR Option

Now, since PGR stock is currently making a series of higher highs and higher lows 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 PGR call option purchase.

The Call Option Calculator will calculate the profit/loss potential for a call option trade based on the price change of the underlying stock/ETF at option expiration in this example from a flat PGR price to a 12.5% increase.

The Optioneering Team uses the 1% Rule to select an option strike price with a higher percentage of winning trades. In the following PGR option example, we used the 1% Rule to select the PGR option strike price but out of fairness to our paid option service subscribers we don’t list the strike price used in the profit/loss calculation.

Trade with Higher Accuracy

When you use the 1% Rule to select a PGR in-the-money option strike price, PGR stock only has to increase 1% for the option to breakeven and start profiting! Remember, if you purchase an at-the-money or out-of-the-money call option and the underlying stock closes flat at option expiration it will result in a 100% loss for your option trade! In this example, if PGR stock is flat at 209.75 at option expiration, it will only result in a 6.6% loss for the PGR option compared to a 100% loss for an at-the-money or out-of-the-money call option.

Using the 1% Rule to select an option strike price can result in a higher percentage of winning trades compared to at-the-money or out-of-the-money call options. This higher accuracy can give you the discipline needed to become a successful option trader and can help avoid 100% losses when trading options.

The goal of this example is to demonstrate the powerful profit potential available from trading options compared to stocks.

The prices and returns represented below were calculated based on the current stock and option pricing for PGR on 4/18/2024 before commissions.

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 PGR stock increases 5.0% at option expiration to 220.24 (circled), the call option would make 43.0% before commission.

If PGR stock increases 10.0% at option expiration to 230.73 (circled), the call option would make 92.6% before commission and outperform the stock return more than 9 to 1*.

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.

Interested in accessing the Optioneering Calculators? Join one of Chuck’s Trading Services 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.

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Wishing You the Best in Investing Success,