### **Wyckoff Phase: Accumulation**
1. **Prior Downtrend:** The weekly chart (left) clearly shows a prolonged and significant downtrend through 2024 and into early 2025. This fulfills the "Markdown" phase that precedes accumulation.
2. **Stopping Action and Base Formation:** The daily chart (right) shows that the steep decline halted around March-April 2025. The price then rallied automatically and has since been consolidating sideways. This sideways trading range, following a major downtrend, is the hallmark of the Accumulation phase, where "smart money" may be absorbing shares and building a cause for a future rally.
3. **Confirming Indicators:** The "Neutral" rating from the technicals gauge confirms the current lack of a strong trend. Furthermore, the positive performance in the last week (+1.45%) and month (+3.62%) shows that selling pressure has subsided and short-term demand is emerging, which is consistent with the early stages of accumulation.
### **Suggested Option Strategy: Poor Man's Covered Call (PMCC)**
Given the analysis that UPS is building a base in an Accumulation phase (implying a neutral to bullish long-term outlook), a **Poor Man's Covered Call (PMCC)**, also known as a long call diagonal debit spread, is a suitable strategy.
This strategy allows you to establish a bullish position with less capital than buying 100 shares, while potentially generating income during the expected consolidation period.
**How it Works:**
This is an advanced strategy and should be approached with a full understanding of the risks.
1. **Buy a Long-Term, In-the-Money (ITM) Call:** Instead of buying 100 shares of UPS, you buy a single call option with a long time until expiration (e.g., 6-12 months). Choosing an in-the-money strike (a strike price below the current stock price) makes the option behave more like the stock.
2. **Sell a Short-Term, Out-of-the-Money (OTM) Call:** Against your long call, you sell a call option with a near-term expiration (e.g., 30-45 days) and a strike price that is above the current stock price.
**Goal of the Strategy:**
The objective is for the short-term call you sold to decrease in value faster than your long-term call due to time decay (theta). Ideally, the short call expires worthless, and you keep the premium. You can then repeat the process by selling another short-term call, continuously reducing the net cost of your long-term bullish position while you wait for the stock to potentially begin its "Markup" or uptrend phase.
***
*Disclaimer: This information is for educational purposes only and is not financial advice. Options trading involves significant risk and is not suitable for all investors. You should consult with a qualified financial professional before making any investment decisions.*
1. **Prior Downtrend:** The weekly chart (left) clearly shows a prolonged and significant downtrend through 2024 and into early 2025. This fulfills the "Markdown" phase that precedes accumulation.
2. **Stopping Action and Base Formation:** The daily chart (right) shows that the steep decline halted around March-April 2025. The price then rallied automatically and has since been consolidating sideways. This sideways trading range, following a major downtrend, is the hallmark of the Accumulation phase, where "smart money" may be absorbing shares and building a cause for a future rally.
3. **Confirming Indicators:** The "Neutral" rating from the technicals gauge confirms the current lack of a strong trend. Furthermore, the positive performance in the last week (+1.45%) and month (+3.62%) shows that selling pressure has subsided and short-term demand is emerging, which is consistent with the early stages of accumulation.
### **Suggested Option Strategy: Poor Man's Covered Call (PMCC)**
Given the analysis that UPS is building a base in an Accumulation phase (implying a neutral to bullish long-term outlook), a **Poor Man's Covered Call (PMCC)**, also known as a long call diagonal debit spread, is a suitable strategy.
This strategy allows you to establish a bullish position with less capital than buying 100 shares, while potentially generating income during the expected consolidation period.
**How it Works:**
This is an advanced strategy and should be approached with a full understanding of the risks.
1. **Buy a Long-Term, In-the-Money (ITM) Call:** Instead of buying 100 shares of UPS, you buy a single call option with a long time until expiration (e.g., 6-12 months). Choosing an in-the-money strike (a strike price below the current stock price) makes the option behave more like the stock.
2. **Sell a Short-Term, Out-of-the-Money (OTM) Call:** Against your long call, you sell a call option with a near-term expiration (e.g., 30-45 days) and a strike price that is above the current stock price.
**Goal of the Strategy:**
The objective is for the short-term call you sold to decrease in value faster than your long-term call due to time decay (theta). Ideally, the short call expires worthless, and you keep the premium. You can then repeat the process by selling another short-term call, continuously reducing the net cost of your long-term bullish position while you wait for the stock to potentially begin its "Markup" or uptrend phase.
***
*Disclaimer: This information is for educational purposes only and is not financial advice. Options trading involves significant risk and is not suitable for all investors. You should consult with a qualified financial professional before making any investment decisions.*
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