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    2024 Feb 08

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    Alejandro Mufardini
    The document provides analysis and profit opportunities for four stocks and ETFs: CRDO, XLF, CVNA, and RAMP. It reviews their monthly and daily charts and recommends call option purchases or debit spreads for each. The analysis uses a 1% rule to select strike prices that can profit from only a 1% stock move.

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    © All Rights Reserved
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    2024 Feb 08

    Uploaded by

    Alejandro Mufardini
    7 views7 pages
    The document provides analysis and profit opportunities for four stocks and ETFs: CRDO, XLF, CVNA, and RAMP. It reviews their monthly and daily charts and recommends call option purchases or debit spreads for each. The analysis uses a 1% rule to select strike prices that can profit from only a 1% stock move.

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    The document provides analysis and profit opportunities for four stocks and ETFs: CRDO, XLF, CVNA, and RAMP. It reviews their monthly and daily charts and recommends call option purchases or debit spreads for each. The analysis uses a 1% rule to select strike prices that can profit from only a 1% stock move.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    7 views7 pages

    2024 Feb 08

    Uploaded by

    Alejandro Mufardini
    The document provides analysis and profit opportunities for four stocks and ETFs: CRDO, XLF, CVNA, and RAMP. It reviews their monthly and daily charts and recommends call option purchases or debit spreads for each. The analysis uses a 1% rule to select strike prices that can profit from only a 1% stock move.

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    © All Rights Reserved
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    You are on page 1of 7

    February 8th,

    2024
    Edition

    SPX Monthly Chart


    On January 31st, the
    S&P posted another
    end of the month
    close above the 10-
    month moving
    average line. This
    shows the continued
    bullish signal.
    Today will look at one
    stock purchase, a call
    purchase, and two
    option debit spreads.

    CRDO
    The first profit opportunity is a stock purchase in CRDO, or Credo Technology Group
    Holding Ltd. CRDO is a technology sector company providing high-performance serial
    connectivity solutions.
    CRDO Monthly Chart
    WT
    The monthly chart
    shows that CRDO closed
    above the monthly
    moving average line
    every month since May
    2023. If the stock price
    is above the moving
    average line, the trend is
    up.
    CRDO Daily Chart

    The daily chart shows that


    CRDO just hit the highest
    point on the chart. The next
    targets are 26 and 30.

    We recommend buying
    CRDO stock at the current
    price level.

    XLF
    The next profit opportunity we will review this week is a call option purchase in XLF,
    or The Financial Select Sector SPDR Fund ETF. XLF seeks to provide investment results
    of the Financial Select Sector Index.
    XLF Monthly Chart

    XLF started its latest Buy


    Signal in November 2023 on
    the monthly chart. During
    the past year, the trend
    flipped several times for
    XLF before this bullish
    trend.
    The daily chart shows that XLF has been trading inside the Upper Keltner Channel or
    higher since November. That’s an excellent sign of strength!

    XLF Daily Chart


    As we said above, we want
    to buy a call in XLF. We will
    first look at selecting a call
    option strike price for
    purchasing an XLF Call. XLF
    is currently trading at
    38.97. Let’s look at buying
    the XLF March 15 35-Strike
    Call. The March 15 options
    expire in 35 days.

    The Call Option Purchase calculator will calculate the profit potential for a call option
    purchase trade based on the price change in the underlying stock/ETF at option
    expiration in this example from a 12.5% change in stock price to a flat stock price.
    We developed what we call the 1% Rule to help us select an option strike price. The 1%
    rule says to limit the time value portion of the option to less than 1% of the stock/ETF
    price. If you limit the time value portion of an option to 1%, the stock price only
    has to move 1% for the option contract to break even and start profiting.
    The calculator will also calculate the time value portion of an option. With this option
    purchase, the time value is 0.18 points (boxed in red). The time value of 0.18 is less
    than 1% of the 38.97 stock price, so this strike price qualifies under the 1% Rule.

    The second row from


    bottom of the calculator
    Buy to Open the XLF Mar 15 35-Strike Call
    lists the dollar profit
    potential. The bottom row
    lists the percent return
    profit potential. We can see
    that if the XLF ETF price
    increases 1% at option
    expiration (boxed in green)
    a 5.1% or $21 profit will be
    realized. This confirms the
    1% Rule of profiting with
    only a 1% increase in the
    stock price.
    There is no limit on the Buy to Open the XLF Mar 15 35-Strike Call
    profit potential of a call
    option purchase if the
    underlying stock •
    continues to increase in
    price. If XLF increases 10%
    between now and option
    expiration, the Call Option
    Purchase Calculator shows
    that the 35-strike call will
    realize an 89.6% or $372
    profit (boxed in green).

    On the other hand, if XLF remains flat at option expiration, the 35-Strike Call will
    only lose -4.3% or -$18. Remember, if you purchase an at-the-money or out-of-the-
    money option and the underlying stock/ETF is flat or down at option expiration, it
    could result a 100% loss for your option trade! Using the 1% Rule to select an option
    strike price can increase your percentage of winning trades compared to trading at-
    the-money or out-of-the- money strikes and this higher accuracy can make you a
    more successful trader.
    We recommend buying the XLF Mar 15 35-Strike Call at current prices.

    CVNA
    The next profit opportunity is in CVNA, or Carvana Co. CVNA is a leading e-commerce
    platform for buying and selling used cars.

    CVNA Monthly Chart

    The monthly chart shows


    that closed above the
    moving average line and
    gave us a new buy signal
    last May. The next targets
    are 62.5 and 70.
    CVNA Daily Chart
    The daily chart shows that
    CVNA went almost straight
    up from the November low
    until the December high. The
    pullback from the December
    high gives us a buying
    opportunity.
    We are going to review a call
    debit spread for CVNA.
    Traders who want a more
    leveraged approach can buy
    CVNA calls.

    Buy to Open the CVNA Mar 15 40-Strike Call


    Sell to Open the CVNA Mar 15 50-Strike Call
    We can see from this
    call option spread
    analysis that the
    spread will make a
    56.3% or $360 profit if
    the CVNA stock price
    declines by -2.5%,
    remains flat, or
    increases in price
    when the options
    expire. If CVNA is
    down -7.5% at
    expiration, the trade
    will make 32.2% or
    $206.

    RAMP
    The last profit opportunity we will review is in RAMP, or LiveRamp Holdings, Inc.
    RAMP operates as a marketing technology company. It provides data foundation,
    digital transformation, consumer engagement, and online marketing and analysis
    services.
    RAMP Monthly Chart

    The monthly chart shows that


    RAMP closed above the moving
    average line every month since
    April. The next target is 50.

    The daily chart shows that RAMP Daily Chart


    RAMP has been forming a
    pattern of higher highs and
    higher lows since November.
    The bullish pattern points to a
    further advance.
    We are going to review a Call
    Debit Spread trade for RAMP.
    Traders who want a more
    leveraged approach can buy
    RAMP calls.

    Buy to Open the RAMP Mar 15 35-Strike Call


    Sell to Open the RAMP Mar 15 40-Strike Call

    We can see from this Call


    Option Spread Analysis that if
    the RAMP stock price declines
    by -2.5%, remains flat, or
    increases in price when the
    options expire, the spread will
    make 38.9% or $140. If RAMP
    is down -7.5% at expiration,
    the trade will make 5.9% or
    $21.
    Want to Learn More from Chuck
    Hughes? Click the Banner Below

    This week we recommended the following:


    Buy CRDO Stock
    Buy to Open the XLF Mar 15 35-Strike Call
    Buy to Open the CVNA Mar 15 40-Strike Call
    Sell to Open the CVNA Mar 15 50-Strike Call
    Buy to Open the RAMP Mar 15 35-Strike Call
    Sell to Open the RAMP Mar 15 40-Strike Call

    Note: Profit performance displayed in this newsletter does not include


    commission cost. Prices are based on Thursday End of Day.

    We’ll see you next


    week!

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