2024年7月11日星期四

‘Buy’ Alert for Under the Radar REIT

Chart of the Day
 

July 11th, 2024

'Buy' Alert for Under the Radar REIT

Dear Reader,

Yesterday, we looked at a Daily Price Chart of United Therapeutics Corp., noting that UTHR's 24/52 Day MACD is trading above the 18-Day EMA signaling a 'Buy'.

For today's Trade of the Day e-letter we will be looking at a monthly chart for Camden Property Trust, stock symbol: CPT.

Before breaking down CPT's monthly chart let's first review what products and services the company offers.

Camden Property Trust is one of the largest publicly traded multifamily companies in the United States. Structured as a Real Estate Investment Trust, the company is engaged in the ownership, management, development, redevelopment, acquisition, and construction of multifamily apartment communities.

Now, let's begin to break down the monthly chart for CPT stock.

Below is a 10-Month Simple Moving Average chart for Camden Property Trust.

Buy CPT Stock

As the chart shows, in March, the CPT 1-Month Price, crossed above the 10-Month simple moving average (SMA).

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

Now, as you can see, the 1-Month Price is still above the 10-Month SMA. That means the bullish trend is still in play! 

As long as the 1-Month price remains above the 10-Month SMA, the stock is more likely to keep trading at new highs and should be purchased.

Our initial price target for CPT is 112.35 per share.

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111.1% Profit Potential for CPT Option

Now, since CPT's 1-Month Price is trading above the 10-Month SMA this means the stock's bullish rally will likely continue. Let's use the Hughes Optioneering calculator to look at the potential returns for a CPT call option purchase.

The Call Option Calculator will calculate the profit/loss potential for a call option trade based on the price change of the underlying stock/ETF at option expiration in this example from a flat CPT price to a 12.5% increase.

The Optioneering Team uses the 1% Rule to select an option strike price with a higher percentage of winning trades. In the following CPT option example, we used the 1% Rule to select the CPT option strike price but out of fairness to our paid option service subscribers we don't list the strike price used in the profit/loss calculation.

Trade with Higher Accuracy

When you use the 1% Rule to select a CPT in-the-money option strike price, CPT stock only has to increase 1% for the option to breakeven and start profiting! Remember, if you purchase an at-the-money or out-of-the-money call option and the underlying stock closes flat at option expiration it will result in a 100% loss for your option trade! In this example, if CPT stock is flat at 108.95 at option expiration, it will only result in a 4.8% loss for the CPT option compared to a 100% loss for an at-the-money or out-of-the-money call option.

Using the 1% Rule to select an option strike price can result in a higher percentage of winning trades compared to at-the-money or out-of-the-money call options. This higher accuracy can give you the discipline needed to become a successful option trader and can help avoid 100% losses when trading options.

The goal of this example is to demonstrate the powerful profit potential available from trading options compared to stocks.

The prices and returns represented below were calculated based on the current stock and option pricing for CPT on 7/10/2024 before commissions.

When you purchase a call option, there is no limit on the profit potential of the call if the underlying stock continues to move up in price.

For this specific call option, the calculator analysis below reveals if CPT stock increases 5.0% at option expiration to 114.40 (circled), the call option would make 53.2% before commission. 

If CPT stock increases 10.0% at option expiration to 119.85 (circled), the call option would make 111.1% before commission and outperform the stock return more than 11 to 1*. 

The leverage provided by call options allows you to maximize potential returns on bullish stocks.

The Hughes Optioneering Team is here to help you identify profit opportunities 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.

Check out Chuck's PRO Trading Service!

I don't want you to miss a single opportunity to potentially reach your goals. That's why I want to share this video I made about my PRO Trading Service. 

I want you to follow in my footsteps for the opportunity to succeed beyond your wildest dreams, so please call my office at (737) 292-4425 and get started today!

Wishing You the Best in Investing Success,

Chuck Hughes

Editor, Trade of the Day

Have any questions? Email us at dailytrade@chuckstod.com

*Trading incurs risk and some people lose money trading.


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