Profit if EVER is Up, Down, or Flat

June 26th, 2020 Profit if EVER is Up, Down, or Flat Dear Reader, Yesterday, we looked at daily price chart and a MACD chart for GDS Holdings Ltd. noting that the stock's MACD line was showing a 'buy' signal. For today's Trade of the Day e-letter we will be looking at a daily price chart for EverQuote Inc. stock symbol: EVER. Before breaking down EVER's daily chart let's first review what products and services the company offers. EverQuote, Inc. operates an online marketplace for insurance shopping in the United States. Its online marketplace offers consumers shopping for auto, home and renters, life, health, and commercial insurance. The company serves carriers, agents, and indirect distributors and aggregators. The company was formerly known as AdHarmonics, Inc., and changed its name to EverQuote, Inc. Now, let's begin to break down the Daily Price chart for EVER stock. Below is a Daily Price chart with the 50-Day EMA and 100-Day EMA for EverQuote Inc. 50-Day EMA and 100-Day EMA 'Buy' Signal The 50-Day Exponential Moving Average (EMA) and 100-Day EMA are moving average indicator lines that can provide buy and sell signals when used together. When the shorter-term 50-Day EMA crosses above or below the longer-term 100-Day EMA, this provides either a buy or sell signal depending on which direction the stock price is moving. • 50-Day EMA line Above 100-Day EMA = Price Uptrend = Buy signal • 50 Day EMA line Below 100-Day EMA = Price Downtrend = Sell signal When the 50-Day EMA (blue line) crosses above the 100-Day EMA (red line) this indicates that the stock's buying pressure has begun to outweigh the selling pressure signaling a 'buy' signal. When the 50-Day EMA crosses below the 100-Day EMA this indicates that the selling pressure has begun to outweigh the buying pressure signaling a 'sell' signal. As the chart shows, on May 7th, 2019, the EVER 50-Day EMA, crossed above the 100-Day EMA. This crossover indicated the buying pressure for EVER stock exceeded the selling pressure. For this kind of crossover to occur, a stock has to be in a strong bullish trend. Now, as you can see, the 50-Day EMA is still above the 100-Day EMA meaning the 'buy' signal is still in play. As long as the 50-Day EMA remains above the 100-Day EMA, the stock is more likely to keep trading at new highs in the coming days and weeks. Our price target for EVER is 68.85 per share. Market Volatility Profit Secrets Don't Forget to Download this Ebook Profit if EVER Is Down 10% Now, since EVER's 50-Day EMA is trading above the 100-Day EMA and the stock will likely continue to rally from here, let's use the Optioneering calculator to look at the potential returns for an EVER covered call trade. Covered calls are also known as buy writes. The Buy Write Calculator will calculate the profit/loss potential for a covered call trade based on the price change of the underlying stock/ETF at option expiration in this example from a 10% increase to a 10% decrease in EVER stock at option expiration. The goal of this example is to demonstrate the 'built in' profit potential for covered calls and the ability of covered calls to profit if the underlying stock is up, down or flat at option expiration. Out of fairness to our paid option service subscribers we don't list the option strike price used in the profit/loss calculation. The prices and returns represented below were calculated based on the current stock and option pricing for EVER on 6/25/2020 before commissions. Built in Profit Potential For this covered call, the calculator analysis below reveals the cost or the breakeven price is $4,792 (circled). The maximum risk for a covered call is the cost of the covered call. The analysis reveals that if EVER is flat at 62.62 or up at all at expiration the covered call will realize a $1,208.00 profit and a 25.2% return (circled). If EVER decreases 5% at option expiration, the covered call will realize a $1,156.90 profit and a 24.1% return. And if EVER decreases 10% at option expiration, the covered call will realize a $843.80 profit and a 17.6% return. Due to option pricing characteristics, this covered call has a 'built in' 25.2% profit potential when the trade was initiated. Covered call trades can result in a higher percentage of winning trades compared to a directional stock trade if you can profit when the underlying stock/ETF is up, down or flat. A higher percentage of winning trades can give you the discipline needed to become a successful trader. The Optioneering Team is here to help you identify winning trades just like this one. Interested in accessing the Optioneering Calculators? Join one of Chuck's Trading Services for unlimited access! The Optioneering Team has option calculators for six different option strategies that allow you to calculate the profit potential for an option trade before you take the trade. Trade High Priced Stocks for $350 With Less Risk One of the big advantages to trading option spreads is that spreads allow you to trade high price stocks like Amazon, Google, Netflix or Apple for as little as $350. With an option spread you can control 100 shares of Apple for $350. If you were to purchase 100 shares of Apple at current prices it would cost about $35,000. With the stock purchase you are risking $35,000 but with an Apple option spread that costs $350 your maximum risk is $350 so your dollar risk is lower with option spreads compared to stock purchases. Want Chuck to Send You Trades? You can start receiving hand-picked trades from Chuck today! Chuck is offering special pricing for his Weekly Option Alert Trading Service for Trade of the Day subscribers. Just call Brad at 1-866-661-5664 or 1-310-647-5664 to join and use the code "Optioneering VIP" to receive special pricing! Wishing You the Best in Investing Success, Chuck Hughes Editor, Trade of The Day Have any questions? Email us at dailytrade@chuckstod.com How Does Chuck Collect A Weekly "Paycheck"? Sign Up for this Free Webinar Now > Unsubscribe Investment Software Inc 22C New Leicester Hwy #117 © 2020 Tradewins Publishing. All rights reserved. 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 Legacy Publishing, LLC ("Legacy") a customized or personalized recommendation to buy, sell, hold, or invest in particular financial products. Past performance is not necessarily indicative of future results. 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