Masco Corp’s Bullish Trend Confirmed

September 2nd, 2020 Masco Corp's Bullish Trend Confirmed Dear Reader, Yesterday, we looked at a Monthly Price Chart of McCormick & Co., Inc., noting the stock's 1-Month Price is trading above the 10-Month SMA. For today's Trade of the Day we will be looking at an On Balance Volume chart for Masco Corp. stock symbol: MAS. Before breaking down MAS's OBV chart let's first review which products and services are offered by the company. Masco Corporation designs, manufactures, and distributes home improvement and building products in North America, Europe, and internationally. The company operates through two segments, Plumbing Products and Decorative Architectural Products. It sells its products to the plumbing, heating, and hardware wholesalers; home centers and online retailers; hardware stores; electrical and landscape distributors; lighting showrooms; building supply outlets; and other mass merchandisers. Confirming a Price Uptrend with OBV The MAS daily price chart below shows that MAS is in a price uptrend as the current price is above the price MAS traded at five months ago (circled). The On Balance Volume chart is below the daily chart. On Balance Volume measures volume flow with a single Easy-to-Read Line. Volume flow precedes price movement and helps sustain the price uptrend. When a stock closes up, volume is added to the line. When a stock closes down, volume is subtracted from the line. A cumulative total of these additions and subtractions form the OBV line. On Balance Volume Indicator ​ ● When Close is Up, Volume is Added ● When Close is Down, Volume is Subtracted ● A Cumulative Total of Additions and Subtractions form the OBV Line Volume flow precedes price and is the key to measuring the validity and sustainability of a price trend. We can see from the OBV chart below that the On Balance Volume line for MAS is sloping up. An up-sloping line indicates that the volume is heavier on up days and buying pressure is exceeding selling pressure . Buying pressure must continue to exceed selling pressure in order to sustain a price uptrend. So, On Balance Volume is a simple indicator to use that confirms the price uptrend and its sustainability. The numerical value of the On Balance Volume line is not important. We simply want to see an up-sloping line to confirm a price up trend. 121.4% Profit Potential for MAS Option Now, since MAS's OBV line is in an uptrend this means the stock's bullish rally will likely continue. Let's use the Hughes Optioneering calculator to look at the potential returns for a MAS call option purchase. The Call Option Calculator will calculate the profit/loss potential for a call option trade based on the price change of the underlying stock/ETF at option expiration in this example from a flat MAS price to a 12.5% increase. The Optioneering Team uses the 1% Rule to select an option strike price with a higher percentage of winning trades. In the following MAS option example, we used the 1% Rule to select the MAS option strike price but out of fairness to our paid option service subscribers we don't list the strike price used in the profit/loss calculation. Our initial price target for MAS is 64.15 per share. This Could Change How You Trade Forever Chuck Hughes doesn't fear market volatility like most people. That's because Chuck has found a way to engineer trades to profit if the underlying stock goes up OR down. Making money regardless of market direction takes the worry out of trading for Chuck and it can do the same for you today! CLICK HERE to learn Chuck's secr et ! Trade with Higher Accuracy When you use the 1% Rule to select a MAS in-the-money option strike price, MAS stock only has to increase 1% for the option to breakeven and start profiting! Remember, if you purchase an at-the-money or out-of-the-money call option and the underlying stock closes flat at option expiration it will result in a 100% loss for your option trade! In this example, if MAS stock is flat at 59.36 at option expiration, it will only result in a 6.2% loss for the MAS option compared to a 100% loss for an at-the-money or out-of-the-money call option. Using the 1% Rule to select an option strike price will result in a higher percentage of winning trades compared to at-the-money or out-of-the-money call options. This higher accuracy can give you the discipline needed to become a successful option trader and can help avoid 100% losses when trading options. The goal of this example is to demonstrate the powerful profit potential available from trading options compared to stocks. The prices and returns represented below were calculated based on the current stock and option pricing for MAS on 9/1/2020 before commissions. When you purchase a call option, there is no limit on the profit potential of the call if the underlying stock continues to move up in price. For this specific call option, the calculator analysis below reveals if MAS stock increases 5.0% at option expiration to 62.33 (circled), the call option would make 57.6% before commission. If MAS stock increases 10.0% at option expiration to 65.30 (circled), the call option would make 121.4% before commission and outperform the stock return more than 12 to 1. And if MAS stock increases to our initial price target of 64.15 at option expiration the call option would make 96.8% before commission. The leverage provided by call options allows you to maximize potential returns on bullish stocks. The Hughes 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. Start Trading Like Chuck Today! Today Chuck is offering you a very special deal. As a Trade of the Day subscriber, if you sign up and become a member of The Chuck Hughes Inner Circle Trading Service today, he will give you special discount. 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 Big Profits Are Possible for Any Trader You don't need to be a seasoned professional in order to make big profits in the stock market. Everybody has the opportunity to potentially make big bucks in the market. Whether you're a beginner or a pro, my book can give you the keys to trading success. 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