Play defense by buying options on this package delivery giant
While headline risks — specifically the ongoing tensions with Iran — continue to dictate the broader market’s direction, yesterday’s price action offered a glimpse of what a potential peace agreement could deliver. If the negotiations recently mentioned by President Donald Trump materialize, we could easily see a sharp, V-shaped recovery across the board. However, until the dust settles, defense is the best offense. As options traders, our playbook right now should be strictly focused on keeping trading volume low, reducing capital exposure, and pushing expiration dates further out to give our setups room to breathe. Following yesterday’s market-wide reversal, a few compelling charts are starting to stand out. UPS is at the top of my list, presenting a clean, purely technical entry. To time this setup, I am focusing on three specific indicators: Fast MACD (5, 13, 5): I prefer this highly responsive MACD setting because it highlights shifts in momentum well before the crowd catches on. On March 17th, this indicator crossed into bullish territory, and it hasn’t looked back. The blue MACD line continues to track cleanly above the yellow signal line, confirming the upward momentum is holding strong. Directional movement index: The DMI is my go-to for assessing the internal health of a trend. It tracks the DI+ (green line) for buyers and the DI- (red line) for sellers. A downtrend is clearly marked when the red line dominates the green. Right now, we are seeing both lines curl and actively change their trajectories. This convergence provides the very first footprint of a structural trend change. Relative strength index: Since March 3, UPS has been battered, dragging its RSI deep into the oversold zone — under 30. Buying blindly into oversold conditions is a quick way to lose capital; I always wait for the stock to prove it has a pulse. We got that proof yesterday. The RSI decisively crossed back above the 30-level, a classic signal that sellers are exhausted and buyers are stepping back into the driver’s seat. The trade setup: UPS 97-98 bull call spread To play this impending bounce, I am targeting a 97/98 bull call spread. When the market is this fragile, this structure is brilliant because you can enter the trade risking as little as $50. If the broader market recovery gains traction, it is incredibly easy to scale up by simply stacking more contracts. What makes this trade so attractive is the minimal heavy lifting required from the underlying stock. If UPS can manage just a simple $1 move in our direction, we capture the maximum 100% ROI. We aren’t looking for a massive, multi-week breakout — just a routine technical bounce in a beaten-down name. On a quick side note: If manually tracking these setups isn’t your style, and a fully automated trading system piques your interest, check out our new auto-trading capabilities here . Here is my exact trade setup: Buy $97 call, April 17 expiry Sell $98 call, April 17 expiry Contracts: 1 Cost: $50 Potential Profit: $50 — Nishant Pant Founder: https://tradewithmaya.com/ Author: Mean Reversion Trading YouTube, Twitter: @TheMeanTrader DISCLOSURES: Pant has a UPS bull call spread expiring on April 17. All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, or its parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
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