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I hope you had a wonderful Thanksgiving and got some shopping done without being mauled!

When I’m stalking a potentially bullish trade for my Weekly Windfalls portfolio, I like to find stocks with a solid support level in place.

^^me stalking big winners^^

Then, I’ll structure a trade by selling put option spreads on that stock— essentially betting that the shares stay above the strike price through the option’s lifetime.

What’s the advantage of this strategy over buying stock or even calls if my bias is bullish?

Well…

I’m giving myself three ways for the position to make money: if the stock stagnates, if it  moves slightly lower, or rallies.

Because the odds are in my favor — option sellers can experience a 70% win rate! — my trades are based on the “casino strategy.”

If any of this sounds intimidating—it’s okay.

A couple years ago I didn’t even know how to apply it effectively— but now I’m utilizing this strategy to make an extra six-figures in trading profits.

Let me teach YOU about the power of options, and how to structure trades that take advantage of stocks that are at key support levels.

Moving Averages

Probably the most commonly cited line of support is the moving average. A moving average essentially takes out the “noise” of the stock’s trajectory.

A 10-day moving average, for instance, is simply the average of the 10 previous days’ closes.

The 200-day moving average may be the most-watched of all trendlines, and many traders will buy shares on pullbacks to the 200-day.

As such, it can act as a springboard for a stock.

Take for instance Ross Stores (ROST). You’ll see on the chart below that the 200-day has contained most pullbacks in 2019.

Former Highs

An area that previously acted as a ceiling for a stock can then turn into a level of support.

J.B. Hunt (JBHT) shares had trouble climbing above the $115 area in September.

However, in mid-October, the company reported stronger-than-expected quarterly revenue, and JBHT climbed above $115.

This level has since emerged as a foothold for the stock.

Round-Number Support

Often times, round numbers (20, 50, 80, 100, etc.) will act as key areas of support, as investors use these levels as targets at which to buy a stock.

Because, think about it — are you more likely to set an alert for a level like $100, or one like $97? It’s $100, right? Because it’s just a nice even number.

For example, take a look at PayPal (PYPL). After peaking above $120 in August, the shares started slipping, but have found a floor in the round-number $100 area.

Trendline of Higher Lows

Sometimes you’ll be able to draw levels of potential support — including when a stock is making a series of higher lows.

After gapping higher in March, Yeti (YETI) stock subsequently rallied into the $38 area. Afterwords, the shares pulled back to around $24.

Since then, the stock’s lows have gradually gone higher.

As such, in mid-November I put YETI on my Weekly Windfalls watchlist, with the $29 level emerging as a future area of support.

Fibonacci Retracements

Probably my favorite technical indicator: the Fibonacci retracement.

Mathematician Leonardo Fibonacci discovered a sequence in which each successive number equals the sum of the two previous numbers: 0, 1, 2, 3, 5, 8, and so on.

Without getting into the nitty-gritty — and suppressing my past life as a school teacher — the Fibonacci sequence has been called “nature’s secret code.” It can be found in everything from flowers to the Great Pyramid at Giza.

But WTH does it have to do with stocks?

When a stock rips higher into a huge rally and then stalls, it will often RETRACE around support near the Fibonacci lines — most often considered 23.6%, 38.2%, 50%, 61.8%, and 76.4%.

So, if Stock XYZ skyrocketed to $100 and stalled, it might then pull back to $50, which would be a 50% retracement.

But let’s look at a real-life example that I cited in Jason Bond Picks.

IVERIC bio (ISEE) stock was trading below $1 in mid-October.

The gene therapy company then reported encouraging data on its key eye drug, Zimura.

As a result, ISEE shares more than quadrupled, eventually stalling around $4.25.

The stock then RETRACED its steps, finding support in the $3 zone — which, as you can see on the chart below, represents a 38.2% Fibonacci retracement of its pre-surge level to its post-surge highs.

A breakout above $3.50 — around a 23.6% Fibonacci retracement — would represent a possible buy zone, as the next stop could be its former highs in the low-to-middle $4s.

Bull Gaps

When a stock makes a huge move higher in one day, that’s called a “bull gap.”

These kinds of leaps higher can often translate into support for the shares going forward.

For instance, Dollar General (DG) stock rocketed higher in late August, following a blowout earnings report.

Ever since the $155 area — where DG landed after that earnings release — has acted as support for the security.

Bear Gaps

Finally, gaps lower — called bear gaps — can also point to potential support.

Look at Beyond Meat (BYND).

In late October, the stock took a nosedive after the company’s post-IPO lock-up period expired, allowing early backers to sell shares and cash in their proverbial chips.

BYND stock found support around $77.50, and even remained calm, cool, and collected when the broader equities market dropped sharply — suggesting a bottom was close.

As such, I recommended a vertical put spread on BYND to my Weekly Windfalls premium subscribers.

I sold at-the-money puts at the 77.50 strike, expecting the shares to stay above that level in the short term.

I then bought weekly 75-strike puts, to limit my losses in the event BYND dropped further.

Just THREE SESSIONS LATER, the stock was, in fact, headed toward $80.

I decided to book profits on my Weekly Windfalls position, locking in a cool $6,000 WINNER.

And it was all because I identified a key area of support.

What could you do with an extra $6,000 — or more — this week?