Chuck Hughes here. I just found a great trade set up for URI that I wanted to highlight for you. This example will show you how I’m able to profit 81.8% when a stock increases in price, stays flat, or even drops -7.5%. I know, it sounds too good to be true. But let me walk you through it.

United Rentals, Inc. (URI) is the largest equipment rental company in the world, with an integrated network of rental locations in United States, Canada and Europe. The company’s customer base includes construction and industrial companies, utilities, municipalities, government agencies, independent contractors and homeowners and other individuals that use equipment for projects that range from simple repairs to major renovations. 

Below is a Daily Price chart with the 50-Day EMA and 100-Day EMA for URI.

Time to Buy?

As the chart shows, on June 21st, the URI 50-Day EMA, crossed above the 100-Day EMA.

This crossover indicated the buying pressure for URI stock exceeded the selling pressure. For this kind of crossover to occur, a stock has to be in a strong bullish trend.

Now, as you can see, the 50-Day EMA is still above the 100-Day EMA meaning the ‘buy’ signal is still in play.

As long as the 50-Day EMA remains above the 100-Day EMA, the stock is more likely to keep trading at new highs and should be purchased.


Now, since URI’s 50-Day EMA is trading above the 100-Day EMA and will likely rally from here, let’s use the Hughes Optioneering calculator to look at the potential returns for a URI call option spread.

The analysis reveals that if URI stock is flat or up at all at expiration the spread will realize an 81.8% return (circled). 

And if URI stock decreases 7.5% at option expiration, the option spread would make an 81.8% return (circled). 

Due to option pricing characteristics, this option spread has a ‘built in’ 81.8% profit potential when the trade was identified*.

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. 


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