Fundamental inputs continue to jostle the market, leaving us with back-and-forth market chop for now.

As we see the impact of US-EU tariff negotiations initially creating a bearish input last week and then being dialed back to a later implementation helping the upside to start this week, it’s clear that directional traders are getting chopped.

As we see a House Budget bill progressing that may now be getting re-evaluated, it’s again clear that most looking for directional momentum up or down are simply not getting paid off.

There are gems out there that are pressing to new highs, of course, but for me, the focus is on trying to leverage the range with the help of options.

So, I’ll highlight a name today that’s giving me some interesting signals.  First, it’s rangebound and near the bottom of the range.  Second, AI highlighted it as a potential bullish candidate, which is really what got me started looking at it in the first place.  And maybe just as importantly, it shouldn’t be impacted by major tech earnings this week from NVDA.

That company is SLB:

Looking at the chart, the range appears to be fairly set in the short term from $33 to $36.50.  Current prices are around $33.90, so there’s greater upside to retest resistance than retesting support, which means I can look for some potential upside leverage.

Add into that the Stock Forecast Toolbox projection for the next 2 weeks, and my interest grows exponentially:

The AI model chosen here shows a strong potential for upside back to the highs of the range, and with a model predicting range bounded behavior and retesting highs while I’m also looking at it from a technical perspective as being rangebound with an initial indication that it may retest highs, I’m feeling much more confident here.

And with options, I have several ways I can execute this trade idea.  I could use an outright call for simplicity, such as the June 20th $34 call, currently price at $1.07.  Alternatively, I can use a debit call spread which performs ideally if SLB rallies but finds resistance near the highs of the range, such as a June 20th $34.5/$36.5 call debit spread for $0.54.  Either way, I need the same general thing – I need a rally within the range.  But the key here is to find the options strategy that generates a high expected value by combining my price target with my expected trade return evaluation.  And right now, this is certainly a stock that generates a lot of interest for me given the directional trade focus that doesn’t need a breakout rally to pay off.

If you’d like to get your hands on the Stock Forecast Toolbox, you can access  a free trial HERE.

And as always, please go to http://optionhotline.com to review how I traditionally apply artificial intelligence, technical signals, volatility analysis, and probability analysis to my options trades.  And if you have any questions, never hesitate to reach out.

Keith Harwood

Keith@OptionHotline.com