June 14th, 2022
New 52-Week Lows for EXAS Shares
Dear Reader,
Yesterday, we looked at a Monthly Price Chart of Dillard’s, Inc. noting the stock’s 1-Month Price is trading above the 10-Month SMA signaling a ‘Buy’.
For today’s Trade of the Day we will be looking at a Daily Price chart for EXACT Sciences Corp. stock symbol: EXAS.
Before breaking down EXAS’s daily price chart let’s first review which products and services are offered by the company.
Exact Sciences Corporation provides cancer screening and diagnostic test products in the United States and internationally. The company offers Cologuard, a non-invasive stool-based DNA screening test to detect DNA and hemoglobin biomarkers associated with colorectal cancer and pre-cancer.
Now, let’s begin to break down the Daily Price chart for EXAS. Below is a Daily Price Chart with the price line displayed by an OHLC bar.
Sell EXAS Stock
The Daily Price chart above shows that EXAS stock has been hitting new 52-Week Lows regularly since early May.
Simply put, a stock does not just continually hit a series of new 52-Week Lows unless it is in a very strong bearish decline.
The Hughes Optioneering team looks for stocks that are making a series of 52-Week Lows as this is a good indicator that the stock is in a powerful downtrend and a good candidate for a bearish position.
You see, after a stock makes a series of two or more 52-Week Lows, the stock typically continues its price downtrend and bearish positions should be initiated.
Our initial price target for EXAS stock is 34.90 per share.
Profit if EXAS is Down, Up, or Flat
Now, since EXAS shares are making a series of new 52-Week Lows, the stock will likely continue its trend downward. Let’s use the Hughes Optioneering calculator to look at the potential returns for an EXAS put option spread.
The Put Option Spread Calculator will calculate the profit/loss potential for a put option spread based on the price change of the underlying stock/ETF at option expiration in this example from a 10.0% decrease to a 10.0% increase in EXAS stock at option expiration.
The goal of this example is to demonstrate the ‘built in’ profit potential for option spreads and the ability of spreads to profit if the underlying stock is down, up, or flat at option expiration. Out of fairness to our paid option service subscribers we don’t list the option strike prices used in the profit/loss calculation.
The prices and returns represented below were calculated based on the current stock and option pricing for EXAS on 6/13/2022 before commissions.
Built in Profit Potential
For this option spread, the calculator analysis below reveals the cost of the spread is $325 (circled). The maximum risk for an option spread is the cost of the spread.
The analysis reveals that if EXAS stock is flat or down at all at expiration the spread will realize a 53.8% return (circled).
And if EXAS stock increases 10.0% at option expiration, the option spread would make a 53.8% return (circled).
Due to option pricing characteristics, this option spread has a ‘built in’ 53.8% profit potential when the trade was initiated.
Option spread trades can result in a higher percentage of winning trades compared to a directional option trade if you can profit when the underlying stock/ETF is up, down or flat.
A higher percentage of winning trades can give you the discipline needed to become a successful trader
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.
Trade High Priced Stocks for $350 With Less Risk
One of the big advantages to trading option spreads is that spreads allow you to trade high price stocks like Amazon, Google, or Netflix for as little as $350. With an option spread you can control 100 shares of Google for $350. If you were to purchase 100 shares of Google at current prices it would cost about $213,000. With the stock purchase you are risking $213,000 but with a Google option spread that costs $350 your maximum risk is $350 so your dollar risk is lower with option spreads compared to stock purchases.
Average Portfolio Return of 135.6%
Below is a screenshot of the current open trade profit opportunities for Option Spread recommendations from Chuck’s Weekly Option Alert Trading Service. There are currently $18,724.00 in open trade profits with an average trade return of 135.6% demonstrating the ability of the Optioneering Option Spread Strategy to deliver substantial returns with no losing trades.
Get Chuck's Trades Sent to You!
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As a Trade of the Day subscriber, Chuck is offering you a special discount on his Weekly Option Alert Trading Service.
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!
You can also CLICK HERE to schedule a call!
Wishing You the Best in Investing Success,
Chuck Hughes
Editor, Trade of the Day
Have any questions? Email us at dailytrade@chuckstod.com
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