Today I am going to walk you through a great potential trade. Not only will we look at which ticker is setting up, I will layout the amazing indicator that helped me spot this one and many others.

In this example chart of Dick’s Sporting Goods Inc. (DKS), the MACD chart is showing us what we need to know. It is a very powerful tool for spotting significant momentum in a stock. With that info, we can build a trade that fits right into our trading plan.

Grab DKS On This Move

The DKS daily price chart below shows that DKS 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.

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.

Up, Down or Flat—This DKS Trade Can Still Profit

Now, since DKS’s 24/52 Day MACD is trading above the 18-Day EMA and will likely rally from here, let’s use the Hughes Optioneering calculator to look at the potential returns for a DKS call option spread.

The analysis reveals that if DKS stock is flat, up at all, or down 7.5% at expiration the spread will realize a 65.3% return (circled). 

The prices and returns represented below were calculated based on the current stock and option pricing for DKS on 2/29/2024 before commissions.

Access to our Calculators Today!

You can gain unlimited access to our cutting-edge Optioneering Calculators that revolutionize your approach to trading by signing up for Chuck’s Lifetime Income Project. Our expert Optioneering Team has meticulously crafted calculators for six distinct option strategies, empowering you to assess the profit potential of your trades. You’ll also receive actionable trade alerts from Chuck as well as additional stock and option training from the Champ. Click here to join today!

Why Trade Option Spreads?

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.

Wishing You the Best in Investing Success,

Chuck Hughes

Editor, Trade of the Day

Unlock Chuck’s trading insights with our complimentary text alerts! Sign up now to receive expert tips, live event notifications, and exclusive discounts. [Register for free!]

*Trading incurs risk and some people lose money trading.