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Analysis:

AGL is currently trading at $8.63

AGL recently broke out of a flag pattern. It continues to move in the direction of the underlying trend. Though resistance is nearby, we expect to see AGL through it soon.

To trade this, we would hesitate against a strong directional trade with resistance so close by. Instead, we would look to a directional trade, but one that can also benefit from sideward movement. This could translate to doing a Bull Call spread.

Here is the setup:

  • Max Risk: $3,375
  • Max Reward $2,875

The payoff matrix below shows pure profit and loss with $8.63 being the current share price. It indicates that if AGL tracks sideward, the positions stays fairly neutral to positive. But with only a 1% rise in share price, the profit increases overtime. The first target would be roughly $9 where ~20% profit is made. I would likely suggest a stop of $8.25 as it is a historic support level where minimal damage is incurred.

If you would like to learn how and when to use this strategy, and other strategies like it, then please contact us here at TradersCircle on 03 8080 5788. Alternately, you can access our free resources which run through advanced strategies.