When I spotted this trade example, I had to send it to you. Take a look below and I’ll show you what helped me uncover it, how to get the biggest potential trade benefit, and also, I’ll update you on a previous example.
Goldman Sachs Group (GS) just created a “fin” on the CCI indicator at the bottom of its chart. Let me explain and show you how this example would work as a trade.
The Commodity Channel Index (CCI) reveals big reversals as they are about to happen. To get more info on the CCI, click here. On this chart you can see the pattern shaping up:
This latest move is heading toward zero indicating a bullish move. We want CCI on GS to go up to create a fin shape. We also want the price to go up to at least $340 before entering a trade. The first target would be $350.
The next step is to consider what you can do with this information. Let’s take a look at how an option trade could provide a big win.
To buy stock shares of GS today, price would be approximately $339.68. If price went to $350 you would make about $10.32 per share.
That said, option trading offers the potential of a smaller initial investment and higher percentage gain even when price is expected to rise or fall. Let’s take a look.
If you bought one Call option contract covering 100 shares of GS’s stock with a May 19th expiration date for the 350 strike, premium would be approximately $6.25 today, or a total of $625 per contract. If the stock price rose the expected $10 the premium might increase approximately $5.00 to $11.25 per share on your 100-share contract. This is a 80% gain over a couple weeks.
To learn more about trading options, see the other indicators I uses to spot trades, and to get these examples before they are emailed out, be sure to visit my site here.
I love to trade, and I love to teach. It is my thing.
I wish you the very best,
Wendy
Past potential trade update:
Last week we discussed buying WBA calls. It did not reach our target entry price. No trade would be taken.
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