Join Tony as he walks you through a Macro Market outlook, where he shares his top bearish and bullish options trading ideas, These include Disney (DIS), Shopify (SHOP), Intel (INTC), Adobe (ADBE), and Apple (AAPL). He explores growth vs. value, current sector rotation, key earnings, and more.
This video premiered on November 18, 2024.
When looking for stocks to invest in, spotting strong stocks in promising sectors poised to bounce can be tricky and complicated. You have to forecast a sector’s likely position in the coming months, find stocks within those sectors that are relatively strong, and then dentify which ones are declining and which are near a bullish reversal.
Rather than following each stock individually to check if it meets the criteria, you can get a big-picture view with fewer steps using this tip for StockCharts’ highly useful MarketCarpets tool.
The first step is to analyze each sector, which you’ve hopefully included as part of your ChartLists. If you don’t have an S&P Sectors ChartList, it’s time to create one. If you read my article last week, you’d know that the strongest month for the Communications Services sector (using XLC as our proxy) is January. Right now, the sector is starting to pull back, yet XLC’s StockChartsTechnicalRank (SCTR) stands at 94, above the ultra-bullish 90 range.
You can also confirm this by opening up your MarketCarpets, selecting S&P Sector ETFs in the Select Group menu, selecting Bollinger Band Position in the Measurements menu, and selecting Latest Value in the Color By menu.
FIGURE 1 MARKETCARPETS CHART OF SECTOR ETFS. Notice that XLC is between +100 and -100, meaning it’s above the middle Bollinger Band.Image source: StockCharts.com. For educational purposes.
The Bollinger Band Position tells you where the stock is within the indicator:
If the stock is near the top line, it’s close to +100.If it’s near the bottom line, it’s closer to -100.If it’s around the middle line (the average), it’s near 0.
XLC, the Communications sector proxy, is above the middle band and declining. So, why choose XLC over other sectors that are also declining but likely to bounce? Because XLC has an SCTR score of 94, and its seasonality profile is more favorable than the others.
FIGURE 2. SEASONALITY CHART OF XLC. January is a strong month for XLC and tends to outperform the S&P 500.Image source: StockCharts.com. For educational purposes.
The sector tends to decline in November but rises in December and January, its strongest seasonal month relative to the S&P 500.
Now go back to MarketCarpets and, under the Select Group menu, click on the Communications Sector.
FIGURE 3. MARKETCARPETS CHART OF THE COMMUNICATIONS SECTOR. Quite a mixed bag of stocks spread all over the upper and bottom bands.Image source: StockCharts.com. For educational purposes.
Remember the objective of this particular stage: You’re looking for strong stocks near the middle Bollinger band.
Now that you can see where each stock is positioned relative to the middle band, you’ll want to check their SCTR scores and overall momentum on a daily chart. Review each stock that meets the criteria and catches your interest.
This morning, I found DoorDash (DASH), part of the Internet industry group, to be particularly interesting. It currently has a Bollinger Band Position of 53%. While DoorDash may not be the flashiest stock on Wall Street, it plays a key role in helping families by providing meal delivery when they’re short on time. Take a look at a daily chart of DoorDash below.
FIGURE 4. DAILY CHART OF DASH. The stock may be bound for a pullback. However, it also displays more buying pressure than its other sector peers.Chart source: StockCharts.com. For educational purposes.
If you go through the list of stocks in the previous MarketCarpets chart, you’ll find that many of the bigger names either lack buying pressure or display selling pressure based on the Chaikin Money Flow (CMF). The CMF may be receding a bit here, and surprisingly, buyers jumped in to scoop up shares of DASH as soon as it began dipping. However, DASH is in overbought territory according to the Money Flow Index (MFI), suggesting that further declines might be possible (unless buyers en masse decide that now’s the time to jump in).
Ideally, the price would fall closer to the middle Bollinger Band, which coincides with the second and third quadrant lines, both levels indicating strength within a pullback (see green rectangle). The bottom quadrant line marks the lowest swing point. If DASH closes below this level, then the current uptrend will no longer be valid.
Finding the right stocks is all about following a structured process. By combining MarketCarpets with the Bollinger Band Position view, you can get a clearer picture of stocks positioned for a potential bounce. Start with sector analysis and drill down to find the best picks. Not only does this approach save time, it’s one of the few efficient ways to go through this process both quickly and effectively, which is a key advantage in a rapidly changing market.
Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.
Today we explore the bullish sentiment that has taken SPX valuations to the moon. There are many out there that believe we have hit a plateau on prices that will continue permanently. We talk about the quote: “Stock prices have reached ‘what looks like a permanently high plateau,’ Irving Fisher, Yale economist, told members of the Purchasing Agents Association at its monthly dinner meeting…” When did this quote come out? Carl reviews our earnings chart.
Carl looks at our signal tables to get a sense of the condition of the market. Then he discusses his outlook for the market as well as covering Bitcoin, Yields, Bonds, Gold, the Dollar, among others.
After covering the market, Carl analyzes the short- and intermediate-term charts of the Magnificent Seven. NVDA reports earnings on November 18th.
Carl takes some time to look at Real Estate (XLRE) “under the hood” and discusses its nearing Dark Cross Neutral Signal that is on tap.
Erin covers sector rotation, comparing defensive sectors to aggressive sectors. She looks under the hood at Utilities which is a sector that is showing new momentum among the sectors. With a possible market decline continuing, this defensive area of the market could find favor and continue higher.
The pair finish with looking at viewer symbol requests with an eye toward the intermediate term today.
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01:03 “…a permanently high plateau”?
03:35 DP Signal Tables
05:50 Market Analysis
15:44 Magnificent Seven
21:44 Real Estate Sector
23:12 Questions
28:06 Sector Rotation
40:06 Symbol Requests
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(c) Copyright 2024 DecisionPoint.com
Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
DecisionPoint is not a registered investment advisor. Investment and trading decisions are solely your responsibility. DecisionPoint newsletters, blogs or website materials should NOT be interpreted as a recommendation or solicitation to buy or sell any security or to take any specific action.
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Good morning and welcome to this week’s Flight Path. Equities saw the “Go” trend continue this week but we saw weaker aqua bars at the end of the week. Treasury bond prices painted strong purple “NoGo” bars as the weight of the evidence suggested the “NoGo” will continue. U.S. commodities painted aqua “Go” bars after flirting with amber “Go Fish” bars of uncertainty last week. The dollar showed no weakness this week with an uninterrupted string of bright blue “Go” bars.
The GoNoGo chart below shows that after hitting a new higher high on strong blue “Go” bars we saw a Go Countertrend Correction Icon (red arrow) signaling that price may struggle to go higher in the short term. Indeed, price fell in the following days, and GoNoGo Trend has painted weaker aqua bars. We will watch to see if price finds support at last month’s high. GoNoGo Oscillator also has fallen to test the zero line from above and we will watch to see if it finds support here as well. If the oscillator rallies back into positive territory we will look for price to make an attempt at another higher high.
A Go Countertrend Correction Icon (red arrow) has showed itself on the weekly chart after last week saw price fall into the end of the week. GoNoGo oscillator is in positive territory at a value of 3 and so no longer overbought. We will watch to see if it falls toward the zero line from here and if it does we will monitor for signs of support. GoNoGo Trend is painting strong blue “Go” bars as momentum remains positive confirming the direction of the trend.
Treasury Rates See Continued Strength
Treasury bond yields saw the “Go” trend continue this week and after a couple of weaker aqua bars the indicator showed a return to strength with bright blue bars all week as price rallied to challenge for new highs. GoNoGo Oscillator was perhaps responsible for the rally as we saw it bounce of the zero line into positive territory at the beginning of the week. Now, with GoNoGo Trend painting strong blue bars the oscillator is in positive territory at a value of 2.
A week of strength propelled price to new highs again this week as GoNoGo Trend painted a string of unbroken bright blue “Go” bars. We are seeing a Go Countertrend Correction icon (red arrow) on the current bar as there is some waning momentum finally. GoNoGo Oscillator has fallen out of overbought territory and is approaching the zero line. We will watch to see if it finds support as and when it gets there. If it rallies quickly back into positive territory we will see that as a sign of trend continuation for the greenback.
As the secular bull market takes a short-term pause, now is the time to research tremendous opportunities that lie ahead. I’ve looked at more than a thousand charts and wanted to point out 3 in particular that I see heading much, much higher as we close out 2024 and move into a brand new year. There are tons of companies that have been regularly setting 52-week and all-time highs. Most of those are very overbought and carry more short-term risk. I want to instead focus on stocks that have been basing for an extended period of time and have just made a breakout.
I love this breakout. We’ve actually had two breakouts. The first was the move above the 190 area, stopping at 200. Then more recently, AMZN cleared 200 before profit taking kicked in this past week with options expiration. We’re now back close to that 200 support level. Here’s the 10-year weekly chart:
The current setup looks eerily similar to the setup heading into 2020. I trust this current breakout, considering that AMZN’s top in 2021 started a lengthy consolidation/basing period – similar to a cup formation. If we use that cup as a measurement stick for the potential rally ahead in AMZN shares, we’d be looking at 320. I’d take that 60% gain.
FTNT is another stock that has an excellent long-term track record, but struggled during a lengthy consolidation/basing period since late-2021:
It’s important to point out that software ($DJUSSW) just broke out and it’s been the 3rd best industry group since the current secular bull market was confirmed in April 2013, rising 774% over the past 11 1/2 years. The only two industry groups stronger have been computer hardware ($DJUSCR, +1019%) and semiconductors ($DJUSSC, +1488%). This compares to a 266% jump in the S&P 500. I’ll take a leading stock in a leading industry group, both of which are breaking out, ANY TIME.
Yep, that’s 2 out of 3 Dow Jones component stocks, joining AMZN. I love the breakout here. The patterns don’t get any nicer and more bullish than this one. HD topped in late-2021, just like both AMZN and FTNT, before proceeding to print a beautiful, symmetrical, rounded cup:
I see HD having a strong finish to 2024 and a very solid 2025. Throw in HD’s 2.2% dividend yield, a dividend that’s risen every year since the turn of the century, and I believe there are the makings of a “super stock” in the years ahead. Steady grower with rising income to boot! Yes please!
I see the Dow Jones Industrial Average being very strong for the foreseeable future, partly due to the AMZN and HD outlooks, but I still favor small- and mid-caps BIG TIME. I’m hosting a webinar later this morning at 11:00am ET, “Capitalizing on Small- and Mid-Cap Strength”. It’s completely free (no credit card required) to the public, but you do need to register for the event. You can follow the link to do so and to learn more information about the event. If you can’t make the 11am webinar, absolutely no worries. All of those who register will gain access to the recording, including those registering after the event has ended. So be sure to REGISTER NOW to find out why small and mid caps are poised to EXPLODE!
Also, my latest Weekly Market Recap video, “Monthly Options and Negative Divergences Hammer the Bulls!” has been published on YouTube. You can watch it HERE.
Happy trading!
Tom
“The economy is not sending any signals that we need to be in a hurry to lower rates.” These words from Chairman Powell impacted the stock market much more than this week’s inflation data.
The stock market started selling off on Thursday afternoon and continued to do so Friday, with the broader stock market indexes closing lower. The Dow Jones Industrial Average ($INDU) closed down by 0.70%, the S&P 500 lower by 1.32%, and the Nasdaq Composite ($COMPQ) lower by 2.2%.
It’s also options expiration Friday, which generally means increased volatility. The Cboe Volatility Index ($VIX) gained 12.79% on Friday, closing at 16.14. That’s a big jump from earlier in the week.
The Nasdaq experienced the biggest drop of the three indexes. The chip makers got smoked. Applied Materials (AMAT), the largest US chipmaker, was down 8.76% on a disappointing revenue forecast. Nvidia (NVDA) was down over 3%, Micron Technology (MU) was down almost 3%, and Intel (INTC) fell 1.70%.
The daily chart of the VanEck Vectors Semiconductor ETF (SMH) gives a clear picture of the semiconductor industry.
FIGURE 1. DAILY CHART OF THE VANECK VECTORS SEMICONDUCTOR ETF (SMH). The sharp selloff in semiconductor stocks resulted in a technical weakness in the chart of SMH. It’s close to a support level, while its SCTR score, MACD, and relative strength with respect to the S&P 500 weaken.Chart source: StockChartsACP. For educational purposes.
Although SMH is still within the sideways range (grey rectangle), it’s very close to the bottom of the range, which aligns with the 200-day simple moving average (SMA). The StockCharts Technical Rank (SCTR) score is at a low 29, the moving average convergence/divergence (MACD) indicates a lack of momentum, and SMH is not outperforming the S&P 500 like it once did.
Looks like investors are rotating away from semiconductors, either taking profits or investing in other asset classes — but which ones? It’s certainly not healthcare stocks, which also got pounded on Friday. Perhaps cryptocurrencies. However, there’s more brewing beneath the surface.
The economy is still strong—retail sales data shows that consumers continue to spend, which is pushing Treasury yields higher. The 10-year US Treasury Yield Index ($TNX) closed at 4.43% (see daily chart below). TNX has been trending higher since mid-September and since the end of September has been trading above its 20-day SMA.
FIGURE 2. DAILY CHART OF THE 10-YEAR US TREASURY YIELD. Treasury yields have been on a relentless yield since September. A stronger US economy would keep yields higher.Chart source: StockChartsACP. For educational purposes.
Fed Chairman Powell and Boston Fed President Susan Collins’ comments lowered the probability of a 25-basis-point interest rate cut in the December FOMC meeting. According to the CME FedWatch Tool, the probability is now 58.2%. It was close to 70% on Thursday, before Powell’s speech.
The relentless yield rally may have been one reason the Tech sector sold off. Higher yields don’t benefit growth stocks.
One asset class that is gaining ground is the US dollar. When the words “Dollar sets 52-week high” appear in my predefined alerts dashboard panel, it’s something to analyze. The US dollar ($USD) has been in a relatively steep rally since October (see chart below). With a strong US economy and the Fed indicating a more neutral stance in their policy decisions, the dollar could continue to strengthen.
FIGURE 3. DAILY CHART OF THE US DOLLAR. The dollar has been in a roaring rally since October. A strong US economy supports a strong dollar.Chart source: StockChartsACP. For educational purposes.
With the exception of the Dow, the other broader indexes have fallen to the lows of November 6, the day after the US presidential election. The broad-based selloff could continue into early next week. There’s not much economic data for next week, but Nvidia will announce earnings after the close on Wednesday. That should shake up the chip stocks.
If you have cash on the sidelines, there could be some “buy the dip” opportunities. However, because there are some dynamics between stocks, yields, and the US dollar, the three charts should be monitored to identify signs of a reversal. When you’re confident of a reversal, jump on board.
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S&P 500 down 2.08% for the week, at 5870.62, Dow Jones Industrial Average down 1.24% for the week at 43,444.99; Nasdaq Composite down 3.15% for the week at 18,680.12$VIX up 8.03%% for the week, closing at 16.14Best performing sector for the week: FinancialsWorst performing sector for the week: Health CareTop 5 Large Cap SCTR stocks: Applovin Corp. (APP); Palantir Technologies (PLTR); Summit Therapeutics (SMMT); MicroStrategy Inc. (MSTR); Redditt Inc. (RDDT)
October Housing StartsNovember Michigan Consumer SentimentFed speechesNvidia earnings
Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.
In this StockCharts TV video, Mary Ellen reveals what took place last week and how the markets closed. She also revealed what drove price action, and what to be on the lookout for next week. In addition, she shares several stocks that broke out of powerful bases on bullish news.
This video originally premiered November 15, 2024. You can watch it on our dedicated page for Mary Ellen on StockCharts TV.
New videos from Mary Ellen premiere weekly on Fridays. You can view all previously recorded episodes at this link.
If you’re looking for stocks to invest in, be sure to check out the MEM Edge Report! This report gives you detailed information on the top sectors, industries and stocks so you can make informed investment decisions.
(This is an excerpt from the subscriber-only DP Weekly Wrap for Friday)
Friday, the Biotechnology ETF (IBB) 20-day EMA crossed down through the 50-day EMA (Dark Cross), above the 200-day EMA, generating an IT Trend Model NEUTRAL Signal. IBB recently switched to a BUY Signal on Friday November 8 and we said at the time, “IBB is approaching the top of a four-month trading range (resistance), so this BUY Signal doesn’t look very juicy at this time.” This emphasizes why we consider Trend Model signals to be information flags, not action commands. Always check the chart.
Part of the reason Biotechs fell apart was the nomination of Robert F. Kennedy Jr. to the Health and Human Services department. He is known to be anti-COVID vaccines and just generally not a fan of chemicals for the body. This doesn’t necessarily bode well for this industry.
Participation has been plummeting as more and more stocks lose support at key moving averages. This drop below the 200-day EMA is perilous and given the negative indicators, the decline isn’t likely over yet. The PMO is dropping below the zero line on a Crossover SELL Signal and Stochastics are below 20 signaling extreme weakness. Support is arriving around 130.00, but it doesn’t look good.
The weekly chart shows the breakdown from the rising wedge formation, which is the normal resolution from this formation. The weekly PMO is tumbling lower. Support on the weekly chart is around 123.00. That would be a painful decline added to this already deep decline.
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Technical Analysis is a windsock, not a crystal ball. –Carl Swenlin
(c) Copyright 2024 DecisionPoint.com
Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
DecisionPoint is not a registered investment advisor. Investment and trading decisions are solely your responsibility. DecisionPoint newsletters, blogs or website materials should NOT be interpreted as a recommendation or solicitation to buy or sell any security or to take any specific action.
Helpful DecisionPoint Links:
Trend Models
Price Momentum Oscillator (PMO)
On Balance Volume
Swenlin Trading Oscillators (STO-B and STO-V)
ITBM and ITVM
SCTR Ranking
Bear Market Rules
There’s no denying the strength that the mega cap growth names have exerted on the equity markets in 2024. With their outsized weight in the major equity averages, and their strong performance into November 2024, the Magnificent 7 stocks in many ways reflect the investor optimism that has been much of the story of this bull market.
But with these leading growth names rotating lower this week, pushing the Nasdaq 100 down 3.4% and the S&P 500 down 2.1% through Friday’s close, we need to reconsider the sustainability of the uptrend phase through year-end 2024. We can easily group the eight stocks, which I call the “Magnificent 7 and Friends”, into three distinct buckets. Let’s review the technical configurations for these stocks, and focus on what levels could help us confirm a new market trend.
Three of these eight leading growth names have already broken to a new all-time high in Q4, and while Netflix, Inc. (NFLX) and Amazon.com, Inc. (AMZN) both deserve our attention, I think the chart of NVIDIA Corp. (NVDA) perhaps best illustrates what we’re seeing with these top performers.
These three are in confirmed uptrends, as defined by Charles Dow’s original definition of higher highs and higher lows. So the analysis here is simple: as long as that uptrend persists, the charts are in good shape. For NVDA, that means a “line in the sand” around $132, which lines up with late October swing low as well as the 50-day moving average.
During an uptrend phase, stocks will often pull back to an ascending 50-day or 10-week moving average. So if charts like Nvidia are able to hold this key short-term trend barometer, then the uptrend remains in place. But if these first three stocks fail to hold expected support, that could provide a key market tell as the “generals” would show signs of weakness.
Three of the eight charts on this list are testing short-term resistance levels, with Meta Platforms, Inc. (META) testing the $600 level as a prime example. But we’ll focus today on Apple, Inc. (AAPL), which has spent the last four months failing to breakout above its July high around $237.
Quite simply, the chart of AAPL is at best “neutral” until and unless it can demonstrate a confirmed break above the July peak. On top of that, we can see the RSI has failed to push above the 60 level on short-term rallies. In fact, with the RSI basically rangebound between 40 and 60, this stock represents an absence of momentum and an equilibrium of buyers and sellers.
For charts like these, I’m reminded of Jesse Livermore’s famous quote, “There is time to go long, time to go short, and time to go fishing.” When the chart is not providing a clear signal to the upside or downside, it’s usually best to find opportunities elsewhere. But if three of these stocks are failing to break to new highs, that suggests limited upside for the S&P 500 and Nasdaq 100.
Now the final two charts are sort of in an “other” bucket, with Tesla Inc. (TSLA) a notable outlier with its exceptionally strong upside rally post-elections, and then an equally dramatic decline over the last week. But I think Microsoft Corp. (MSFT) provides a more compelling technical configuration, given that it’s one of the only growth names on this list that is actively testing price support.
If you connect a trendline from the July peak to the September high, you’ll see that MSFT had a failed breakout above that trendline in late October then again earlier this week. In bullish market phases, charts like this usually follow through on breakouts. But when clear technical breakouts don’t see enough follow-through, that can often be an indication of a wider risk aversion and lack of willing buyers.
With Microsoft in particular, it’s all about the $406 level, which represents a 38.2% retracement of the 2023-24 uptrend phase. There have been numerous tests of this support level over the last three months, and a break below this level could indicate a larger theme of distribution in the equity markets. Bear phases are always marked by stocks being unable to hold key price support!
For a deeper dive into these three charts, along with the rest of the Magnificent 7 and Friends, head on over to my YouTube channel!
RR#6,
Dave
PS- Ready to upgrade your investment process? Check out my free behavioral investing course!
David Keller, CMT
President and Chief Strategist
Sierra Alpha Research LLC
Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.
The author does not have a position in mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author and do not in any way represent the views or opinions of any other person or entity.
As the cybersecurity landscape continues to evolve with increasing digital threats, Zscaler, Inc. (ZS) stands out as a new opportunity after lagging for most of 2024. Recent chart setups in Zscaler stock suggest ZS may be gearing up for a significant bullish trend.
In this analysis, we will break down the bullish signals and Zscaler’s financials, and then outline an optimal options strategy you can apply to capitalize on this opportunity—all identified instantly using the OptionsPlay Strategy Center within StockCharts.com. We’ve included a video illustrating this tool at the end of this article, which will help you get a better idea of how you can apply it to your options trading.
FIGURE 1. DAILY CHART OF ZSCALER. The stock price has broken out above a significant resistance level, and its performance relative to the S&P 500 is improving.Chart source: StockCharts.com. For educational purposes.
Looking at the daily chart of ZS, there are several bullish factors:
Breakout Above Major Resistance. After trading below $200 since March, ZScaler’s stock price has recently completed a bottoming formation and broke out above this critical resistance level. The prolonged consolidation period below $200 formed a solid base, indicating that selling pressure has subsided with buyers gaining control.Market Outperformance. Relative to the S&P 500 ($SPX), ZS’s performance has been improving, suggesting relative strength and increased investor interest in the stock.
These technical factors collectively point towards a potential continuation higher after breaking out above this key $200 resistance level.
Beyond the technicals, Zscaler’s fundamentals further strengthen the bullish thesis:
Robust Revenue Growth. Zscaler reported a 30% year-over-year increase in revenue, reaching $593 million.Impressive Billings Increase. The company achieved a 27% growth in billings, totaling $911 million.Expanding Customer Base. Zscaler now serves 567 customers with over $1 million in annual recurring revenue (ARR)—a 26% increase—and 3,100 customers with over $100,000 in ARR, marking a 19% growth.High Gross Margin. Maintaining a non-GAAP gross margin of 81% for fiscal year 2024 showcases the company’s operational efficiency and profitability.Strong Free Cash Flow. With a free cash flow margin of 27%, Zscaler demonstrates robust cash generation capabilities, providing financial flexibility for future investments and growth initiatives.
Zscaler’s strong financial performance highlights its potential for continued growth. The company’s focus on innovation and the expansion of its Zero Trust Exchange platform positions it well to capitalize on the increasing demand for cloud-based security solutions.
To leverage this bullish outlook on ZS, the OptionsPlay Strategy Center suggests selling the Dec 27 $205/190 Put Vertical @ $5.60 Credit.
Sell. December 27 $205 Put Option at $12.15Buy. December 27 $190 Put Option at $6.60
This strategy involves selling a higher strike put and buying a lower strike put, resulting in a net credit of $5.60 per share, or $560 per contract. The trade profits if ZS stays above $199.40 by the December 27, 2024 expiration date, with a 56.92% probability of success.
FIGURE 2. PUT VERTICAL RISK GRAPH. Here, you see the max reward, max risk, and other details of the trade.Image source: StockCharts.com. For educational purposes.
Trade Details:
Maximum Potential Reward. $560 (the net credit received)Maximum Potential Risk. $1,880 (difference in strike prices multiplied by 100 shares per contract, minus the net credit)Breakeven Point. $199.40 (strike price of the sold put minus the net credit per share)
This strategy benefits from time decay and allows for profit even if the stock remains stagnant or rises moderately. It provides a favorable risk-to-reward ratio while aligning with the bullish outlook on ZS.
This bullish opportunity in Zscaler was identified using the OptionsPlay Strategy Center within StockCharts.com. The platform automatically scanned the market, highlighted ZS as a strong candidate for a continuation higher, and structured the optimal options trade in real-time.
FIGURE 3. APPLYING THE OPTIONSPLAY STRATEGY CENTER. ZS was identified as a stock that has potential for a continued move higher. Click the arrow to the left of the stock symbol to view the trade details.Image source: StockCharts.com. For educational purposes.
By subscribing to the OptionsPlay Strategy Center, you can access:
Automated Market Scanning. Effortlessly discover the best trading opportunities based on comprehensive technical and options strategies in real time.Optimal Trade Structuring. Receive tailored options strategies that align with your market outlook and risk tolerance.Time-Saving Insights. Save hours of research with actionable trade ideas delivered in real time, allowing you to make informed decisions swiftly.
Don’t let valuable trading opportunities pass you by. Subscribe to the OptionsPlay Strategy Center today and empower your trading journey with tools designed to keep you ahead of the market. Access real-time trade ideas like the one discussed in this article and find the best options trades within seconds daily. Let OptionsPlay be your partner in navigating the markets efficiently and effectively.
Learn more about the OptionsPlay Strategy Center features and how to apply them to your trading in the video below!