Happy Thankful Tuesday!
I am excited to share that you don’t need special education or to sit in front of the computer all day to trade options. It can be easily learned if you are interested in spending an hour or so a week earning money in what could be considered “renting” stocks for a short period of time.
This is why I show you the details about an equity’s symbol and pattern each week.
I am typing this on Sunday. The Nasdaq was down 3 out of 5 days.
For the updates on previously discussed symbols, please scroll down.
For today’s Trade of the Day, we will be looking at QUALCOMM Inc. (QCOM).
Before analyzing QCOM’s chart, let’s take a closer look at the company and its services.
QUALCOMM Incorporated engages in the development and commercialization of foundational technologies for the wireless industry worldwide. The company operates through three segments: Qualcomm CDMA Technologies (QCT); Qualcomm Technology Licensing (QTL); and Qualcomm Strategic Initiatives (QSI). QUALCOMM Incorporated was incorporated in 1985 and is headquartered in San Diego, California.
Each candle on the chart represents price movement over a 5-day (week) period. The indicator at the bottom of the chart is a Channel Commodity Index (CCI).
A cross up through the CCI zero or 100 line is bullish, in that it is suggesting price has gone from bullish to even more bullish. A cross up through the zero line and a cross through -100, suggests price is bearish. If you want to learn more about the CCI, you can read through the short section below or you can scroll down to the alert signal.
Channel Commodity Index
A move down to the CCI -100 or the zero line can issue a Put entry signal as it moves from being bullish to bearish. A move toward -100 is a continuation of that bearishness. Up through the 100 line creates a green fin of bullishness, until it drops back down through the -100 line.
A break below the zero line means it has gone from bullish to bearish and a drop below -100 suggests even more bearishness.
The Commodity Channel Index (CCI) is a versatile indicator that can be used to identify a new trend or warn of extreme conditions. Originally, it was developed to identify cyclical turns in commodities, but the indicator can be successfully applied to indices, ETFs, stocks and other securities. In general, CCI measures the current price level relative to an average price level over a given period. CCI is relatively high when prices are far above their average but is relatively low when prices are far below their average. In this manner, CCI can be used to identify overbought and oversold levels or breaks from one level to another.
Check Out How This Trade Could Pay Out Big Time
QCOM’s is bearish as it falls to the 0 and possibly further near the -100 line. This week’s candle is apt to continue its downward movement. We are looking for a continued move below $161 before considering entry. The short term target is $150 and then lower.
If you find that you like the CCI Indicator as an easy-to-read indicator, it is included in the 5-Star Academy educational program which includes a chatroom where I am during the day to do live teaching sessions on M-W-F and to answer questions during the day. It is an incredibly supportive community.
Potential Profit Play for QCOM
If QCOM’s price continues to move down, you could consider a Put trade. I am writing this on Sunday, if price continues to move to $161 when you receive this on Tuesday, you could consider a put option trade. We are expecting the CCI indicator to continue moving to the -100 line.
These examples are listed as an example to show how options work and the advantages they offer.
To buy shares of QUALCOMM Inc. (QCOM) stock today, it would cost approximately $162 per share. You would wait until QUALCOMM hit a bottom before buying stock.
Option trading offers the potential of a lower initial investment and higher percentage gain. It is like renting stock versus buying out right. Let’s take a look.
If you bought one Put option contract covering 100 shares of QCOM’s stock with a April 14th (Apr22) expiration date for the 150 strike, the premium would be approximately $5.55 per share or a total of $555 for the contract of 100 shares. If price fell the expected $12 over the next few weeks, the premium would likely increase approximately $6.00 to $11.55 This is a gain of 108% profit. That would be a nice trade over a short period of time!
It is exciting to make money if price rises or falls.
I want to remind you that you can sell to close and take profit any time along the line before the expiration date. You don’t have to hold the contract until expiration.
Options often offer a smaller overall investment, covering more shares of stock and potential for greater profits. This is like renting stocks versus having to pay full price to buy.
This said, if you are having any kind of trouble taking advantage of these trades, we don’t want you to miss out. I have put together programs that help traders just like you access the potential profits that options provide. Be sure to check out the programs (like 5-Star Academy mentioned earlier) shared in this email and we will make it easy for you to get your share.
I love to trade, and I love to teach. It is my thing.
PS-I have created this daily letter to help you see the great potential you can realize by trading options. Being able to recognize these set ups are a key first step in generating wealth with options. Once you are in a trade, there is a huge range of tools that can be used to manage the many possibilities that can present themselves. If you are interested in learning how to apply these tools and increase the potential of each trade, click here to learn more.
Previous Trade Candidates:
Last week we looked at buying AAPL March 18th 150 Puts. Price reached out target entry on Wednesday 3/2. Premium was $1.22. On ¾ you could have sold at $1.81 or a 48% profit.
Two weeks ago we discussed buying the ABNB March 18th 185 Call Strike. The stock price never got to our entry point so no trade would have been taken.