Strong Volume Flow for ICE Stock

For today’s Trade of the Day we will be looking at an On Balance Volume chart for Intercontinental Exchange, Inc. stock symbol: ICE.

Intercontinental Exchange, Inc. is a leading global operator of regulated exchanges, clearing houses and listings venues, and a provider of data services for commodity, financial, fixed income and equity markets. ICE Data Pricing & Reference Data offers evaluated pricing services and reference data solutions.

On Balance Volume measures volume flow with a single Easy-to-Read Line. Volume flow precedes price movement and helps sustain the price uptrend. When a stock closes up, volume is added to the line. When a stock closes down, volume is subtracted from the line. A cumulative total of these additions and subtractions form the OBV line.

We can see from the OBV chart below that the On Balance Volume line for ICE is sloping up. An up-sloping line indicates that the volume is heavier on up days and buying pressure is exceeding selling pressure. Buying pressure must continue to exceed selling pressure in order to sustain a price uptrend. So, On Balance Volume is a simple indicator to use that confirms the price uptrend and its sustainability.

Confirmed ‘Buy’ Signal for ICE

Since ICE’s OBV line is sloping up, the most likely future price movement for ICE is up, making ICE a good candidate for a stock purchase or a call option spread.

Let’s use the Hughes Optioneering calculator to look at the potential returns for an ICE debit spread.

The analysis reveals that if ICE stock is flat or up at all at expiration the spread will realize a 66.7% return (circled).

And if ICE stock decreases 7.5% at option expiration, the option spread would make a 34.2% return (circled).

Due to option pricing characteristics, this option spread has a ‘built in’ 66.7% profit potential when the trade was identified*.

Option spread trades can result in a higher percentage of winning trades compared to a directional option trade if you can profit when the underlying stock/ETF is up, down or flat.

A higher percentage of winning trades can give you the discipline needed to become a successful trader.

The Hughes Optioneering Team is here to help you identify profit opportunities just like this one.

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