| Strong 'Buy' Signal for Spice Maker |
Dear Reader,
Yesterday, we looked at a Daily Price Chart for Lululemon Athletica Inc., noting that the stock has been making a series of 52-Week Highs.
For today's Trade of the Day e-letter we will be looking at a monthly chart for McCormick & Co., Inc. stock symbol: MKC.
Before breaking down MKC's monthly chart let's first review what products and services the company offers.
McCormick & Company, Incorporated manufactures, markets, and distributes spices, seasoning mixes, condiments, and other flavorful products to the food industry. The company operates in two segments, Consumer and Flavor Solutions. The Consumer segment offers spices, herbs, and seasonings, as well as desserts. This segment markets its products under the McCormick, French, Frank's RedHot, Lawry's, Gourmet Garden, Club House, and OLD BAY brands in the Americas.
Now, let's begin to break down the monthly chart for MKC stock.
Below is a 10-Month Simple Moving Average chart for McCormick & Co., Inc. |
As the chart shows, in May, the MKC 1-Month Price, crossed above the 10-Month simple moving average (SMA).
This crossover indicated the buying pressure for MKC stock exceeded the selling pressure. For this kind of crossover to occur, a stock has to be in a strong bullish uptrend.
Now, as you can see, the 1-Month Price is still above the 10-Month SMA. That means the bullish trend is still in play!
As long as the 1-Month price remains above the 10-Month SMA, the stock is more likely to keep trading at new highs in the coming days and weeks.
We'll be keeping our eye on this stock as it continues to trend upward, so we'll know the moment the market conditions shift and the stock begins to come back down.
Our initial price target for MKC stock is 221.04 per share. |
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| | | Chuck found himself in a tough spot.
Vertigo had forced the pilot into an early retirement. With no income and six kids he had to find a new income stream and fast.
That's when Chuck discovered the secret to income investing.
This secret strategy helped put him on the path to financial freedom and over time made him $millions in cash payouts.
CLICK HERE to learn his secret strategy. |
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| | 104.6% Profit Potential for MKC Option
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Now, since MKC's 1-Month Price is currently trading above the 10-Month SMA 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 MKC 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 MKC 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 MKC option example, we used the 1% Rule to select the MKC 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.
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Trade with Higher Accuracy
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When you use the 1% Rule to select a MKC in-the-money option strike price, MKC 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 MKC stock is flat at 206.20 at option expiration, it will only result in a 10.0% loss for the MKC 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 MKC on 8/31/2020 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 MKC stock increases 5.0% at option expiration to 216.51 (circled), the call option would make 47.3% before commission.
If MKC stock increases 10.0% at option expiration to 226.82 (circled), the call option would make 104.6% before commission and outperform the stock return 10 to 1.
And if MKC stock increases to our initial price target of 221.04 at option expiration the call option would make 72.4% 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.
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Average Portfolio Return of 422.6%
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Below is a screenshot of the current open trade profit results from Chuck's Weekly Option Alert Trading Service. There are currently $781,708.12 in open trade profits with an average portfolio return of 422.6% demonstrating the ability of the Optioneering Strategy to deliver substantial returns with no losing portfolios.
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Chuck's Weekly Option Alert Trading Service |
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| 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! |
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Wishing You the Best in Investing Success,
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| | Chuck Hughes Editor, Trade of The Day
Have any questions? Email us at dailytrade@chuckstod.com |
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© 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. 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 Legacy Publishing LLC 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, Legacy does not make any guarantee or other promise as to any results that may be obtained from using the Services. Legacy 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. Legacy 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. No representation is being made that any person providing a testimonial is likely to continue to experience profitable trading after the date on which the testimonial was provided, and in fact the person providing the testimonial may have subsequently experienced losses. The cost basis for some of the options in a portfolio may be reduced by rolling over profits at option expiration which is one of the Hughes Optioneering Trade Management Rules. Some income figures presented represent the total amount of option premium collected during the referenced period. Actual profits were less. Open trade profit results may have increased or decreased when the trades were closed out. Chuck Hughes' experiences are not typical. Chuck Hughes 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. |
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