Compelling ‘Buy’ for this Asset Manager

September 19th, 2024

Compelling ‘Buy’ for this Asset Manager

On September 19th, I was scanning the market and came across this great looking stock chart, did you happen to catch it too? If not, don’t worry, I have a full breakdown below.

The trade I spotted earlier is for Blackrock, Inc. symbol: (BLK).

What made BLK stock standout is what I noticed in its stock chart. After pulling up BLK’s chart I noticed that the stock is signaling a powerful ‘Buy’ signal!

Below is a snapshot of BLK’s current stock chart. Let’s dive in so I can show you what made me stop scrolling when I saw this chart.

When I looked at this chart, I saw that back in November, BLK shares experienced a bullish breakout to the upside which generated a brand new technical signal for the stock.

In November, BLK’s 1-Month Price finished the month trading above the 10-Month SMA and following my PowerTrend system, this qualifies as a ‘Buy’ signal for the stock.

Now, you may ask yourself, “Well the buy signal occurred in November, have I missed the chance to trade this?” Don’t worry because we still have an opportunity to take advantage of this stock’s move, and I’ll tell you why.

This crossover indicated the buying pressure for BLK stock exceeded the selling pressure. For this kind of crossover to occur, a stock has to be in a strong bullish uptrend and as you can see, the 1-Month Price is still above the 10-Month SMA. That means the bullish trend is still in play! 

When stocks break out to the upside like this, the bullish trend can often last longer than one might think.

How I Would Look to Trade It

Since BLK’s 1-Month Price is still trading above the 10-Month signaling the PowerTrend ‘Buy’, this is offering an attractive trading setup.

I want to look to trade BLK’s trend and have the opportunity to capture some profits by placing an options trade on the stock.

Below is a Call Option Debit spread for BLK that I found just this morning that would allow me to gain some exposure to the stock’s powerful bullish trend but also have some downside protection built in as well. Let me tell you how this works.

Once I place a Call Option Debit spread, it has the ability to profit if the underlying stock/ETF is either up, flat, or even down a bit at option expiration.

Below is a snapshot of my Call Option Debit Spread Calculator that shows the profit potential and downside protection analysis for my trade. This example examines a range of a 7.5% increase to a 7.5% decrease in BLK share price at option expiration.

Looking at the trade analysis, the calculator shows that this one single trade, that would cost you only $625 to enter, has the ability to profit 60.0%.

The calculator reveals that if BLK, at option expiration, were to increase, remain flat, or even drop by as much as 7.5%, this low-cost trade would be set up to make a 60.0% return!

This Call Option Debit Spread strategy has been one of my absolute favorites to trade over the years and remains so today. The key behind it all is that by enabling your ability to profit if a stock is up, flat, or even down a bit gives you a much higher probability that your trade will end up a winner.

*Trading incurs risk and some people lose money trading.