Happy Thankful Tuesday!
I am excited to share that you don’t need special education or to sit in front of the computer all day to trade options. It can be easily learned if you are interested in spending an hour or so a week earning money in what could be considered “renting” stocks for a short period of time.
This is why I show you the details about an equity’s symbol and pattern each week.
I am typing this on Friday which was a half-day and before the new week starts. Last week, the Dow was down 2 days out of 4. There was a large drop on Friday that caused a breech in daily indicators, allowing EMAs to cross down which hasn’t been seen since September. Talk of new virus variant seems to be the main catalyst for the Dow’s drop.
For the updates on previously discussed symbols, please scroll down.
For today’s Trade of the Day, we will be looking at Noravax. Inc. (NVAX).
Before analyzing NVAX’s chart, let’s take a closer look at the company and its services.
Novavax, Inc., a biotechnology company, focuses on the discovery, development, and commercialization of vaccines to prevent serious infectious diseases and address health needs. The company's vaccine candidates include NVX-CoV2373, a coronavirus vaccine candidate that is in two Phase III trials It has a collaboration agreement with Takeda Pharmaceutical Company Limited for the development, manufacturing, and commercialization of NVX-CoV2373, a COVID-19 vaccine candidate. Novavax, Inc. was incorporated in 1987 and is headquartered in Gaithersburg, Maryland.
Each candle on the chart represents price movement over a 5-day (week) period. The indicator at the bottom of the chart is a Channel Commodity Index (CCI).
I drew a line below the candles, if price stays above that line, the upward trend should continue. Watch for a continued rise toward its target.
A cross down through the CCI zero or -100 line is bearish, in that it is suggesting price has gone from bearish to even more bearish. A cross up through the zero line and a cross through 100, suggests price is bullish. If you want to learn more about the CCI, you can read through the short section below or you can scroll down to the alert signal.
Channel Commodity Index
A cross up and over the CCI -100 or the zero line can issue an entry signal as it moves from being bearish to bullish. A rise toward 100 is a continuation of that bullishness. Up through the 100 line creates a green fin of bullishness, until it drops back down through the 100-line.
Also, a pullback and then, as it heads back up is another bullish indicator.
A break below the zero line means it has gone from bullish to bearish and a drop below -100 suggests even more bearishness.
The Commodity Channel Index (CCI) is a versatile indicator that can be used to identify a new trend or warn of extreme conditions. Originally, it was developed to identify cyclical turns in commodities, but the indicator can be successfully applied to indices, ETFs, stocks and other securities. In general, CCI measures the current price level relative to an average price level over a given period. CCI is relatively high when prices are far above their average but is relatively low when prices are far below their average. In this manner, CCI can be used to identify overbought and oversold levels or breaks from one level to another.
Check Out How This Rise in Price Could Pay Out Big Time
NVAX is bullish as it rises further above the zero line. This week’s candle is apt to continue its upward movement that could take it higher. We are looking for a continued rise above $215 before considering entry and then higher. The target is $220 and then higher.
If you find that you like the CCI Indicator as an easy-to-read indicator, it is included in the 5-Star Academy educational program which includes a chatroom where I am during the day to do live teaching sessions on M-W-F and to answer questions during the day. It is an incredibly supportive community.
Potential Profit Play for NVAX
If NVAX’s price continues to move up, you could consider a Call trade. I am writing this on Sunday, if price continues to rise above 215 when you receive this on Tuesday, you could consider a call option trade. We are expecting the CCI indicator to continue rising further above the zero line.
Price is currently at approximately $215 as I write over the weekend and is expected to continue heading up to perhaps, hit the target of $220 and then higher.
If price doesn’t stay above $215, don’t consider a trade. The premium on NVAX is high for a $215 stock and certainly won’t be right for every account. There is extra implied volatility as I work on typing this and I would expect premium to come down by Tuesday, dissipating some of the inflated premium. I am using the premiums listed on my option chain, but I would expect then to be lower by Tuesday, unless premium continues to soar.
These examples are listed as an example to show how options work and the advantages they offer.
If the CCI line stays above the zero line and then, continues up, price will continue its current uptrend and continue to rise. We will keep an eye on it over the course of the next few weeks.
The short-term price target for NVAX is $220 and, perhaps, higher.
To buy shares of Noravax (NVAX) stock today, it would cost approximately $215 per share.
Option trading offers the potential of a lower initial investment and higher percentage gain. It is like renting stock versus buying out right. Let’s take a look.
If you bought 12 shares of NVAX at $215 total investment $2,580 and it increased in price to $220, it would result in a profit of $180 for the 12 shares or an 2% gain.
If you bought one Call option contract covering 100 shares of NVAX’s stock with a Dec 17 (Dec 21) expiration date for the 220-strike, the premium would be approximately $25 per share or a total of $2,500 for the contract of 100 shares. If price increased the expected $5 over the next few weeks to $220 target, the premium would increase approximately $5 to $30. This is a gain of $500 or 20% profit. That would be a nice trade over a short period of time!
It is exciting to make money if price rises or falls.
I want to remind you that you can sell to close and take profit any time along the line before the expiration date. You don’t have to hold the contract until expiration.
Options often offer a smaller overall investment, covering more shares of stock and potential for greater profits. This is like renting stocks versus having to pay full price to buy.
This said, if you are having any kind of trouble taking advantage of these trades, we don't want you to miss out. I have put together programs that help traders just like you access the potential profits that options provide. Be sure to check out the programs (like 5-Star Academy mentioned earlier) shared in this email and we will make it easy for you to get your share.
I love to trade, and I love to teach. It is my thing.
Yours for a prosperous future,
Wendy Kirkland
PS-I have created this daily letter to help you see the great potential you can realize by trading options. Being able to recognize these set ups are a key first step in generating wealth with options. Once you are in a trade, there is a huge range of tools that can be used to manage the many possibilities that can present themselves. If you are interested in learning how to apply these tools and increase the potential of each trade, click here to learn more.
Previous Equities discuss:
Two weeks ago, we discussed SHOP with an expiration of Dec 3rd (Dec wk 1) for a 1,700 strike and a premium of approx. $64. Premium on Tuesday was lower an in the $39 range. On Friday, it rose in the morning to $68.70. A quick 79% gain, and then, by the afternoon, it was back near $39. This was a more expensive equity to trade and wasn’t right for every account.
Last week, we discussed JD and a Dec 10 (Dec wk 2), 95 strike with a 2.42 premium. On the 23rd, it rose as high as 2.75 and then, started dropping throughout the rest of the day and into the week. It happened so fast, likely there would have been no trade last week.
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