We have spotted a potential 94% win. Take a look below.
I teach everyday people (like me) to trade options. I do my best to write in an understandable way as if we are talking over the kitchen table.
The market was up 3 out of 5 days last week. I am typing this on Wednesday, and you won’t get this until Friday. A lot can change in a couple days.
For today’s Trade of the Day, we will be looking at Twitter, Inc. (TWTR).
Twitter, Inc. operates as a platform for public self-expression and conversation in real-time. The company offers Twitter, a platform that allows users to consume, create, distribute, and discover content. Twitter, Inc. was founded in 2006 and is based in San Francisco, California.
Let’s look at TWTR’s weekly chart.
The ADX +DI (green line) has crossed the -DI and the black ADX line is curling up. As long as the +DI is above the -DI, price should rise. The past four weekly candles are positive. If you want to learn more about ADX, read on or, if not, scroll down to the alert.
Average Direction Index (ADX) – Strength Indicator
The Average Directional Index consists of 3 lines: Green, Red and Black.
Green = +DI (Bullish)
Red = -DI (Bearish)
Black = ADX Strength Line
The DI line that is on top is in control. If the ADX line is heading up, strength is supporting the DI line that is on top and in control.
Each candle on the chart represents price movement over a 5-day (week) period; therefore, it takes weeks for trades to play out. When the -DI crosses over the +DI line, it gives a buy signal for Puts as the -DI line (red) appears as if it is in control and rising to head up on the ADX indicator, and as the ADX turns up that is even more bearish, suggesting a downward move is gaining strength. When the +DI (green line) crosses the red and the black line points up it shows an upward trend and Calls can be considered.
TWTR’s Potential Trade – Showing Strength
This signal could give a quick payout if it continues its upward move, and the strength of this pattern continues. I am typing this on Wednesday and TWTR costs about $50. If TWTR’s price moves above $51 and the + DI (green line) is above the -DI with the black line heading up you could consider a Call trade. The short-term price target for TWTR is $55 and then, perhaps, higher. With the swings in past months, I am suggesting small profit targets until a market trend starts again.
Option trading offers the potential of a lower initial investment and higher percentage gain. Let’s take a look and make a comparison.
If you bought 1 share of TWTR it would cost about $50. If price hit the expected $55 target that would be a $5 profit.
If you bought 1 Call option covering 100 shares of TWTR with a April 29th expiration date for the 55 strike the premium would be approximately $2.65 today or $265 for 1 option. If price rose to $55 over the next few weeks, the premium would likely increase $2.50 giving $250 profit on your $265 investment, this is a 94% gain.
Trading options is a win, win, win opportunity. Options often offer a smaller overall investment, covering more shares of stock and potential for greater profits.
I like to stress when trading options, you don’t need to wait for the expiration date to close the trade. You can close anywhere along the way prior to the expiration date. It is never a bad idea to take profit.
Trading options is like renting stocks for a fixed period of time. The potential to generate steady income with options is real and it can be transforming. Watch this video to learn how you can use option trading to achieve financial freedom. click here
Yours for a prosperous future,
Past Equity Candidates:
Two weeks ago, we discussed buying BMY April 14th 72 Calls. On 3/25 the premium was $1.81. As of today (4/6) the premium is $3.30 which is an 82% profit.
Last week we talked about buying LULU April 29th 400 strike calls. On 4/4 price rose to the target entry and the premium was $7.90. We will continue watching this trade.