O Stock | Realty Income Corporation Trading Journal with VantagePoint

VantagePoint Trading Software is a forecasting tool that uses both end of day data and artificial intelligence to provide traders a forecast of market movement. These forecasts are 1-3 days in advance and help traders improve their timing on making trades and maximizing profit potential. The artificial intelligence software forecasts market movement for stocks, futures, Forex, ETFs and Cryptocurrencies.  Realty Income Corporation (O Stock) is in focus today…

This journal entry looks at the recent market movements of Realty Income Corporation NYSE: O

VantagePoint Trading Journal O Stock

Goodbye 2017, hello 2018!  2017 was quite a year.  Some high/low-lights:

-Brexit negotiations and Catalonia
-Future of U.S. trade
-The unraveling of Dodd-Frank
-Tax overhaul
-The U.S. economic boom and continuous stock index records
-Crypto mania
-Media company M&A
-Net neutrality repeal
-OPEC output cut extension
-Paris and Iran deal pullout
-Korea tensions
-The EU’s war on tax avoidance
-…and new Fed leadership.

That’s a lot to take in.  Looking at the charts of the major indexes you would think hardly anything happened.  Obviously, that was not the case.  What will 2018 hold for us?  Buckle in and let’s find out! Today we focus on real estate investment corporation Realty Income Corporation (O):   Here’s the chart:

VantagePoint Trading Journal O

The VantagePoint platform recently indicated a potential upside breakout in the O Stock could be forming due to a bullish crossover on 12/27/17.

Using the predictive indicators embedded within the VantagePoint platform and its predictive AI technology, we will point out two significant things. We have a bullish crossover indicated by the blue predictive indicator line crossing above the black, simple 10-day moving average on 12/27/17. We can combine that with the VantagePoint propriety neural index indicator moving from the zero (0) to the one (1) position. This indicator measures strength and weakness for a 48-hour period. In this case strength.  The move to the one (1) position further makes the case for a potential bullish scenario. That’s why one could consider entertaining a setup to the upside, or more specifically, a move NOT to the downside.

Strategy Discussion

If one were a straight stock trader, simply buying O in the $57.00 area could prove to be prudent. You are anticipating a continuing move to the upside. It’s also a conservative way to enter O without the limitation of time associated with other strategies. In this scenario, it would also be good practice to place a sell-stop order in the $56.00 area to mitigate potential losses.

For more active traders with a shorter investment time horizon, you can consider a setup utilizing options. Given the market conditions outlined above, taking a passive approach may be the best path to success.  In the case of a passive approach, you allow yourself a number of potential outcomes that can eventually lead to a profitable trade instead of relying on just one outcome.

Because of the reasons given above, the sale of a credit put spread may be one way to approach this situation.  To collect the most premium, one may want to sell a call spread as close to the money as possible.  We can consider selling the January 55/57.5 put spread that is trading $0.85.  This will yield a risk to reward ratio of 1.94:1.  This ratio is calculated by taking the width of the spread less any premium collected (2.50 – 0.85) and then dividing that number by the amount of premium collected (0.85).  $1.65 divided by $0.85 = 1.94.  Please note that this spread is slightly in the money presently.

Given the trading and market environment outlined above, a trader must evaluate whether this reward/risk ratio is appropriate for his/her risk tolerance.

 

tylerr@tradermarketinggroup.com'

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