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This morning, we are recommending a new bullish trade on Coca-Cola (NYSE:KO). We last recommended a covered call on KO at the end of December. We made a profit off that trade, and once our KO January 18th $48.50 Covered Call expired worthless, we held KO common stock until mid-February. Then, we took profits on our KO common stock position shortly before the stock dropped on Valentine’s Day in the aftermath of the company’s disappointing earnings announcement.

Now that the stock has finally stabilized at support and is starting to bounce higher, we’re jumping back into a position on KO.

Fundamentally Sound

KO is an iconic beverage company. We’ve said that many times before. It owns brands like Coke, Diet Coke, Sprite, Minute Maid, Dasani, Vitaminwater, and the stock has a strong dividend yield of 3.52%, which makes it an attractive buy in the current market.

Last week’s pullback on the S&P 500 likely caused some portfolio managers to start moving a portion of their portfolios into defensive stocks that have growth potential. KO is one such stock.

We know this because it was one of the few stocks that is moving higher on a day when the broad majority of S&P 500 components were moving lower. We anticipate investors’ move into this stock should keep it above $45.

A Well-Defined Upward Channel

KO tends to bounce back and forth between support and resistance in a long-term up-trending channel. If you look at the weekly chart below, you can see that KO formed this channel over the past eight years.

Weekly Chart of Coca-Cola Company (KO) — Chart Source: TradingView

And on the daily chart, you can see the stock is already starting to move up again.

Daily Chart of Coca-Cola Company (KO) — Chart Source: TradingView

The latest long-term support bounce, when coupled with the company’s strong dividend yield, gives the stock some bullish momentum. We think now would be a great time for a new put write.

To find out which puts we’re selling — and to get access to our full portfolio of income-generating trades — consider signing up for risk-free trial subscription to Strategic Trader today. 

InvestorPlace advisers John Jagerson and S. Wade Hansen, both Chartered Market Technician (CMT) designees, are co-founders of LearningMarkets.com, as well as the co-editors of Strategic Trader.

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