United Parcel Service, Inc. (UPS) Stock Delivers Dollars to Your Door

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Transportation stocks are on the move higher this month. And that has United Parcel Service, Inc. (NYSE:UPS) and FedEx Corporation (NYSE:FDX) front and center for stock bulls. The pair is itching for breakouts, but it’s UPS that commands our attention today. The beauty of its recent price trend demands analysis and a trade idea.

Since cratering on two of its past three earnings announcements, UPS stock has staged a rousing comeback. Though the gains have been modest, the bid beneath the surface has been very consistent. Just look at its behavior around the 20-day moving average for instance.

Excluding the earnings oopsie from late-July, every other pullback this summer was gobbled up at the 20-day. That’s a bullish characteristic. Buyers simply aren’t willing to let the stock fall very far before swooping in to deploy capital.


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Source: OptionsAnalytix

Such consistency has also dragged the 50-day moving average higher showing the intermediate trend rests firmly in the hands (hooves?) of bulls.

The behavior of UPS following its last upswing is telling. Rather than retreating amid heavy profit-taking, the stock is treading water. As usual, the pause is taking on the form of a sideways consolidation, otherwise known as a base.

It’s worth noting that volume patterns have been notably bullish as well. We’ve seen three accumulation days crop up during the basing showing that the big boys are still actively piling into the stock.

Throw it all together, and a breakout over $118.40 seems inevitable. It’s not a matter of if, but when. To prepare yourself, consider the following trade idea.

UPS Trade

The low volatility fog settling over Wall Street is impacting UPS options like everyone else. With an implied volatility rank of 20%, option premiums can be purchased on the cheap.

Buy the Nov $115/$120 bull call spread for $2.85. The potential loss is limited to $2.85, and the potential gain is limited to $2.15. The stock needs to rise above $120 to capture the entire profit.

As of this writing, Tyler Craig didn’t hold any positions in any of the aforementioned securities. Want to learn how to master the art of option selling for high-probability cash flow? Check out Tyler’s recently released video series through Tackle Trading on how to systematically sell iron condors for monthly income.

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