27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.
Ford Motors Co (NYSE:F) is set to print its third-quarter earnings results after the closing bell on Wednesday. The stock reached a new higher high of $16.70 on Oct. 21 and has since lost over 6% of its value in consolidation.
When Ford printed its second-quarter earnings beat on July 28, the stock gapped up the following day and soared almost 7% higher before falling back into a downtrend. On Tuesday, industry analyst Cox Automotive released a note that said it sees U.S. auto sales In October slowing for a sixth consecutive month. Cox also expects Ford’s third-quarter results to show a continued impact of the global chip shortage and noted that Ford’s sales during the quarter fell 28%.
ENTER TO WIN $500 IN STOCK OR CRYPTO
Enter your email and you'll also get Benzinga's ultimate morning update AND a free $30 gift card and more!
When traders and investors hold stock or options over earnings, it can be a gamble because stock prices can have a bullish reaction to a negative print and a bearish reaction to positive results. With Ford trading lower over the past three trading days on decreasing volume, it may be that many traders are waiting for the results before taking a position in the stock.
The Ford Chart: Although Ford has declined recently, the stock is still trading in a solid uptrend above the most previous higher low at $15.37. If the company receives a bullish reaction to earnings, the stock will need to climb over the last higher high to continue the trend.
The lower wicks on the past three daily candles indicate that when Ford’s price drops to the low-of-day, bulls come in and buy the dip. On Wednesday, Ford was attempting to print a long-legged doji candlestick, which indicates the new higher low may be in and the stock is about to reverse to the upside.
The recent consolidation was needed to drop Ford’s relative strength index (RSI), which hit an uncomfortable 76% on Oct. 21. When a stock’s RSI nears or rises above the 70% level it becomes overbought, which can be a sell signal for technical traders. The RSI has now dropped to a more comfortable 61%.
Ford is trading slightly below the eight-day exponential moving average (EMA) but above the 21-day EMA, with the eight-day EMA trending above the 21-day, which indicates indecision. Ford will need to regain the eight-day EMA soon, otherwise the indicator will begin to curl down sharply, which would be bearish.
- Bulls want to see a bullish reaction to earnings and big bullish volume come into Ford’s stock on Thursday to drive it up above the eight-day EMA and towards a resistance level at $16.45. If the stock can regain the level as support, it has room to trade up toward $16.70 and above the level, there is an old resistance level at $17.19 created in March 2015.
- Bears want to see big bearish volume come in following the earnings print to drop Ford down below a support at $15.52 and below the $15.37 mark to negate the uptrend. Below the level, there is further support at $14.80 and $14.23.
27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.