Take a look at this example of a trade I just spotted. Finding great bargains that are overbought or oversold doesn’t have to be as hard as it may seem. Let me show you what I noticed on a chart of JD.com, Inc. (JD).
Be sure to check out the update on a previous trade at the bottom of this message.
On the chart below, I included the Channel Commodity Index indicator which I use to help me spot powerful reversals that are setting up. If you want more information on the CCI click here.
On the CCI at the bottom of the chart you’ll see highlighted areas that look like fins. These tell us there is a high likelihood that the price is changing directions. When that happens, it creates a great trading opportunity.
In this example we want CCI on JD to go up to create a clear fin shape. We also want the price to go up to at least $38 before entering a trade. The first target would be $40.
To buy stock shares of JD today, price would be approximately $37.67. If price went to $40 you would make about $2.33 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 JD’s stock with a June 16th expiration date for the 40 strike, premium would be approximately $1.17 today, or a total of $117 per contract. If the stock price rose the expected $2 the premium might increase approximately $1 to $2.17 per share on your 100-share contract. This is a 85% gain over a couple weeks.
Options can offer a win, win, win trade opportunity. They often offer a smaller overall investment, covering more shares of stock, and potentially offer greater profits.
I love to trade, and I love to teach. It is my thing.
Wendy
Past potential trade update:
Last week we discussed buying BMY calls. On 5-10 the June 16th 65 call was $3.95. The premium on 5-11 was $5.05, a 28% profit.
See Related Articles on TradeWinsDaily.com
eTail Powerhouse Shows A Trade Signal
GXO Logistics Sustaining New ‘Buy’
How To Trade The Wild Debt Ceiling Ride
Chart of the Day: Revisiting Lithium Americas (LAC)
© 2023 Tradewins Publishing. All rights reserved. | Privacy Policy | Terms and Conditions | Contact Us
The information provided by the newsletters, trading, training and educational products related to various markets (collectively referred to as the "Services") is not customized or personalized to any particular risk profile or tolerance. Nor is the information published by Wendy Kirkland a customized or personalized recommendation to buy, sell, hold, or invest in particular financial products. Past performance is not necessarily indicative of future results. Trading and investing involve substantial risk and is not appropriate for everyone. The actual profit results presented here may vary with the actual profit results presented in other Wendy Kirkland publications due to the different strategies and time frames presented in other publications. Trading on margin carries a high level of risk, and may not be suitable for all investors. Other than the refund policy detailed elsewhere, Wendy Kirkland does not make any guarantee or other promise as to any results that may be obtained from using the Services. Wendy Kirkland disclaims any and all liability for any investment or trading loss sustained by a subscriber. You should trade or invest only "risk capital" - money you can afford to lose. Trading stocks and stock options involves high risk and you can lose the entire principal amount invested or more. There is no guarantee that systems, indicators, or trading signals will result in profits or that they will not produce losses.
Some profit examples are based on hypothetical or simulated trading. This means the trades are not actual trades and instead are hypothetical trades based on real market prices at the time the recommendation is disseminated. No actual money is invested, nor are any trades executed. Hypothetical or simulated performance is not necessarily indicative of future results. Hypothetical performance results have many inherent limitations, some of which are described below. Also, the hypothetical results do not include the costs of subscriptions, commissions, or other fees. Because the trades underlying these examples have not actually been executed, the results may understate or overstate the impact of certain market factors, such as lack of liquidity. Wendy Kirkland makes no representations or warranties that any account will or is likely to achieve profits similar to those shown. No representation is being made that you will achieve profits or the same results as any person providing a testimonial. Testimonials relate to various other products offered by Wendy Kirkland and not the product offered here, but all of these products are based on Wendy Kirkland's system. Performance results of other products described in such testimonials may be materially different from results for the product being offered and may have been achieved before the product being offered was developed.
Results described in testimonials from other products or the product being offered may not be typical or representative of results achieved by other users of such products. No representation is being made that any of the persons who provide testimonials have continued to experience the same level of profitable trading after the date on which the testimonial was provided. In fact, such persons may have experienced losses immediately thereafter or may have experienced losses preceding the period of time referenced in the testimonial. No representation is being made that you will achieve profits or the same results as any person providing a testimonial. Wendy Kirkland's experiences are not typical. Wendy Kirkland is an experienced investor and your results will vary depending on risk tolerance, amount of risk capital utilized, size of trading position, willingness to follow the rules and other factors.
|
No comments:
Post a Comment