When I spotted this set up I immediately added it to my watchlist. Trust me, I know how hard it is to scan through stock after stock to find something with serious potential. One of my go-to indicators helps make this process simpler, states Chuck Hughes of Hughes Optioneering.
For today’s trade of the day, we will be looking at a Keltner Channel chart for GSK Plc (GSK). GSK plc, together with its subsidiaries, engages in the research, development, and manufacture of vaccines and specialty medicines to prevent and treat disease in the United Kingdom, the United States, and internationally. It operates through four segments: Pharmaceuticals, Pharmaceuticals R&D, Vaccines, and Consumer Healthcare.
Let’s take a look at the chart below.
Time to Buy GSK Stock?
The Hughes Optioneering Team uses the Keltner Channels as an indicator to determine whether a stock is overbought or oversold. The Keltner Channel “Buy Zone” occurs when a stock is trading below the upper Keltner Channel. Once the daily price is trading below the upper channel, it provides a lower-risk buying opportunity as the stock is likely to rally.
Looking at the chart we can see that GSK is currently inside of the “Buy Zone” which offers a trade entry opportunity for GSK. Let’s use the Hughes Optioneering calculator to look at the potential returns for a GSK call option purchase. For this specific call option, the calculator analysis below reveals if GSK stock increases 5.0% at option expiration to 43.46 (circled), the call option would make 56.0% before the commission.
If GSK stock increases 10.0% at option expiration to 45.53 (circled), the call option would make 115.1% before the commission and outperform the stock return by more than 11 to one. The prices and returns represented below were calculated based on the current stock and option pricing for GSK on 2/13/2024 before commissions.
