This industrial giant is flashing signs of a bullish turnaround. Trading the bounce with options
Amid the geopolitical tensions and the resulting March market corrections, many stocks have taken a massive hit. GE Aerospace is a prime example, shedding roughly 22% of its value in under two months. Even after beating recent earnings estimates, the stock continued to slide because forward guidance remained flat. However, the chart is now flashing multiple early warning signs of a structural trend change. That is exactly what I am stalking for today’s trade setup. I am relying on three core indicators to time this potential reversal: I am relying on three core indicators for this trade setup: Accelerated MACD (5, 13, 5): I prefer this highly responsive MACD setting because it highlights shifts in momentum well before the crowd catches on. Right now, the blue MACD line is aggressively curving upward but has not quite crossed above the yellow signal line. That crossover is the final confirmation required to make this setup solid. If GE maintains its current trajectory, we could see that trigger in the next day or two. Directional movement index (DMI): The DMI is my go-to for assessing the internal health of a trend. It tracks the DI+ (green line) for buyers and the DI- (red line) for sellers. GE is currently in a clear downtrend, marked by the red line dominating the green. However, we are now seeing both lines curl and actively change their trajectories. This convergence provides the very first footprint of a structural trend change. RSI (Relative Strength Index): The RSI, which measures the velocity of a stock’s price movement, has been steadily climbing since April 22. If this momentum does not stall here and continues to push higher, it will provide a crucial third layer of confirmation. Everything hinges on how the price action develops over the next 48 hours. The trade setup: GE 280-285 Bull Call Spread With GE currently trading around the $284 level, my game plan is to construct an at-the-money (ATM) bull call spread, essentially sandwiching the current price between my strikes. Because we are still waiting on that final MACD confirmation, it is highly likely that GE will be trading above $285 by the time the signal officially fires. Regardless of where the price ultimately lands, the structure remains identical: simply buy the call option one strike below the current price (in-the-money) and sell the call option one strike above it (out-of-the-money). These ATM spreads can almost always be filled for a limit price of roughly $2.50. This pricing keeps position sizing completely effortless. For instance, scaling into a 4-contract position means risking exactly $1,000 for the opportunity to walk away with a matching $1,000 in profit. A quick note before we wrap up: Catching these aggressive sentiment shifts in real time is incredibly difficult for any human trader. That is exactly why I built Maya, an algorithm grounded entirely in technical analysis with zero emotional bias. While most traders were still paralyzed by fear and wondering if it was safe to re-enter, Maya quietly doubled its account during this exact recovery phase. If stepping back from the screens and utilizing a 100% rules-based system interests you, feel free to check out the details here: https://tradewithmaya.com/autotrading . Here is my exact trade setup: Buy $280 call, May 29 expiry Sell $285 call, May 29 expiry Contracts: 1 Cost: $250 Potential Profit: $250 Disclosures : Nishant has a GE bull call spread expiring on May 29. -Nishant Pant Founder: https://tradewithmaya.com/ Author: Mean Reversion Trading Youtube, Twitter: @TheMeanTrader DISCLOSURES: All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, or its parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
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