September 21, 2018

Looks Like Google Has Found A Bottom

Another day of gains looks in store for U.S. equities as stocks advance across the globe, with China’s Shanghai Composite Index even closing up 2.5%. The DJIA and S&P 500 set new highs Thursday as the economic outlook got rosier: Initial jobless claims, a proxy for layoffs across the U.S., fell to the lowest level since 1969. A recent spike in government bond yields is further signaling that investors are viewing next week’s expected interest rate hike from the Fed as a testament to the strength of the economy.

*Source:  Seeking Alpha

Let’s consider Alphabet, Inc. (Ticker: GOOGL):

The VantagePoint platform recently indicated upside momentum.

Using the predictive indicators embedded within the VantagePoint platform and its predictive AI technology, we will point out three significant things. We have a bullish crossover indicated by the blue predictive indicator line crossing above the black simple moving average on September 20th.  We can combine that with the VantagePoint propriety neural index indicator moving from the RED to the GREEN on September 18th.  This indicator measures strength and weakness for a 48-hour period, in this case, bullishness.  The move to the GREEN position further makes the case for a potential bullish scenario. We also have the predicted high and low above yesterday’s actual high and low indicating further strength.  I want to play the VP continued bullish indication.

Strategy Discussion

If you are strictly a stock trader, simply buying GOOGL in the $1183.00 area is a prudent move.  You are anticipating a move to the upside.  It is always a good idea to enter a sell-stop order to mitigate potential losses.  Placing that sell-stop in the $1177.00 area will achieve that goal.

For active traders with a shorter investment time horizon, you can consider a setup utilizing options. Given the market conditions outlined above, taking an active, premium debit approach may be the best path to success.

Because of the reasons given above, the purchase of a debit call spread may be one way to approach this situation.  You will first want to calculate your target strike.  In order to do this, you will need three pieces of data:  current price, expiration date and the implied volatility associated with that expiration date.  For GOOGL, that yields a targeted strike of ~$1240.  You may want to consider the GOOGL October 19th regular monthly expiration 1230/1240/1245 broken wing call butterfly spread, buying it for $1.30.  The most you can lose is the premium paid and the most you can gain is the width of the wider spread less any premium paid.  Max risk = $1.40 and max reward = $8.60

This means that you are getting odds of 6.14:1.

Given the trading and market environment outlined above, a trader must evaluate whether this reward/risk ratio is appropriate for his/her risk tolerance.

Strategy Discussion

Back on Tuesday, September 17th we highlighted a bullish indication in ConocoPhillips (Ticker: COP).  We showed how we could take advantage of this bullish indication by purchasing the October 19th regular monthly expiration 77.5/80 call spread paying $0.50.  Here’s a look at today’s chart:

As you can plainly see, COP has continued its bullish run and is showing no signs of slowing down.  The spread is now trading approximately $0.65.  You could realize a profit of $0.15 or a profit of 30.0%.  Until we see any signs of slowing bullish momentum, we will continue to hold this position.

If you would like to learn more about the VantagePoint platform and take advantage of the exclusive offer that our clients enjoy, please visit:

https://discover.vantagepointsoftware.com/prosper-demo/

about the author:

Mike Shorr

Since 1994, Michael has been an on-the-floor market maker, Vice-President of Interest Rate Derivatives for Knight Financial Products and Director of Education and Options Instructor at Trading Advantage. He makes the oftentimes complex world of options and trading accessible to the novice and advanced trader alike. Michael has a Bachelor of Science degree in Statistics and Finance from the University of Illinois Champaign-Urbana. He presently is Director, Trader Education at ProsperTradingAcademy.

Read Similar Articles

September 30, 2020

Bad News For NKLA Can Be Good News For NIO

  We had a great example of a swing buy entry in NIO, Inc., the electric car company (Ticker: NIO). It’s based on a break out pattern on an hourly chart and confirmed with a daily chart.   Click the video below to learn more details: Grab a free day pass to one of our live […]

Read Article
September 29, 2020

The Similarities and Differences Between VIX and VXX

The VIX and VXX are both very popular trading vehicles for trading volatility.  But, unlike the perceptions of many traders, they are not exactly interchangeable.  There are many similarities and more importantly, some very important differences. Click the video below to learn more details: Grab a free day pass to one of our live signal […]

Read Article
August 4, 2020

TSLA Inside Bar Entry

An inside bar is just what the name implied.  It is a bar that is “inside” of another bar.  We use a daily chart for this approach.  So the high from two days ago is higher than the high from one day ago and the low of two days ago is lower than the low […]

Read Article

Read Similar Articles

September 30, 2020

Bad News For NKLA Can Be Good News For NIO

  We had a great example of a swing buy entry in NIO, Inc., the electric car company (Ticker: NIO). It’s based on a break out pattern on an hourly chart and confirmed with a daily chart.   Click the video below to learn more details: Grab a free day pass to one of our live […]

Read Article
September 29, 2020

The Similarities and Differences Between VIX and VXX

The VIX and VXX are both very popular trading vehicles for trading volatility.  But, unlike the perceptions of many traders, they are not exactly interchangeable.  There are many similarities and more importantly, some very important differences. Click the video below to learn more details: Grab a free day pass to one of our live signal […]

Read Article
August 4, 2020

TSLA Inside Bar Entry

An inside bar is just what the name implied.  It is a bar that is “inside” of another bar.  We use a daily chart for this approach.  So the high from two days ago is higher than the high from one day ago and the low of two days ago is lower than the low […]

Read Article