Dear Reader,

Yesterday, we looked at a Daily Price Chart of KLA Corp., noting that KLAC’s OBV line is sloping up, validating the recent bullish trend.

For today’s Trade of the Day we will be looking at a Keltner Channel chart for Ingersoll Rand Inc. (IR). Ingersoll Rand Inc. is a global industrial company, with expertise in industrial and mission-critical flow creation technologies. It has 2 segments. Industrial Technologies & Services segment engages in manufacturing products, including air compressors, couplers, vacuum pumps, power tools, blowers and others.

Take a look at the chart below.

Buy IR Stock

The IR daily price chart shows that the stock is in a strong price uptrend and has become overbought several times. You can see this as IR has traded above the Upper Keltner Channel on multiple occasions recently.

But, in every scenario when IR became overbought, the stock soon experienced a pullback.

Finding opportunities when a stock experiences a pullback is why the Hughes Optioneering Team uses the Keltner Channels. They help us find a lower-risk entry point.

The Keltner Channel “Buy Zone” occurs when a stock is trading below the upper Keltner Channel. Once the daily price is trading below the upper channel, it provides a lower-risk buying opportunity as the stock is likely to rally.

87.0% Profit Potential for IR Option

Now, since IR stock is currently trading in the Keltner Channel ‘Buy Zone’ and it’s bullish run is likely to continue, let’s use the Hughes Optioneering calculator to look at the potential returns for an IR call option purchase.

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 IR stock increases 5.0% at option expiration to 94.75 (circled), the call option would make 43.2% before commission. 

If IR stock increases 10.0% at option expiration to 99.26 (circled), the call option would make 87.0% before commission and outperform the stock return nearly 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.

The prices and returns represented below were calculated based on the current stock and option pricing for IR on 3/6/2024 before commissions.

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Editor, Trade of the Day

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*Trading incurs risk and some people lose money trading.