When risk-on sentiment returns, here's an options trade on a stock that may lead the charge
After a strong rebound from the tariff-induced correction, the markets have now been moving sideways for the past three weeks. This kind of consolidation is typical — it's how markets build up energy for the next leg, whether that's higher or lower. When risk-on sentiment returns and money starts flowing into growth stocks, the Magnificent 7 typically lead the charge. As that momentum builds, we can expect several trading opportunities to emerge. One stock that appears to be setting the stage is Meta (META) , which has been range-bound since May 14th and looks poised for a breakout. To confirm this potential setup, I'm relying on several technical indicators that can help validate the breakout and improve the probability of a successful trade. MACD (5,13,5): Since the traditional MACD is slower to react, I often use a short-term MACD to capture earlier entry signals. A bullish crossover, where the MACD line moves above the signal line, can be a helpful early indicator for starting a position. That said, the quicker sensitivity of this version also means it can produce more false positives, so tight trade management is essential. A common approach is to close the trade if the MACD line dips back below the signal line, suggesting momentum is fading. In the case of META, we just saw this faster MACD trigger a bullish crossover on May 30, 2025, offering a potential early entry point. DMI (Directional Movement Index): The DMI (Directional Movement Index) is made up of three components: DI+ (green), DI- (red), and the ADX (blue), which measures overall trend strength. When DI- is above DI+, it generally indicates a downtrend. However, when these lines start to reverse direction, it often signals a potential shift in trend. For META, the DI+ line is spiking sharply upward, suggesting a strengthening bullish trend and offering early confirmation of a possible breakout. Support/Resistance Even without relying on technical indicators, a simple look at price action reveals that META is testing a key resistance zone. A decisive breakout above this level would serve as strong confirmation that the stock is ready to push into the $700s in the near future. The Trade Setup: META 670-675 Bull Call Spread To take advantage of a potential breakout in META, I'm deploying a bull call spread. With the stock trading near $670.90, the position is built by purchasing the $670 call and simultaneously selling the $675 call, creating a defined-risk trade. If META ends up at or above $675 by June 27th, the trade stands to deliver a 100% return on the amount invested. This setup provides a cost-effective way to gain upside exposure while keeping risk tightly controlled. Here is my exact trade setup: Buy $670 call, June 27th expiry Sell $675 call, June 27th expiry Cost: $250 Potential Profit: $250 I explore many such setups in depth in my book, Mean Reversion Trading , and there is a plethora of great examples on my website https://tradingextremes.com . -Nishant Pant Founder: https://tradingextremes.com Author: Mean Reversion Trading Youtube, Twitter: @TheMeanTrader DISCLOSURES: (None) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their 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 CONSITUTE 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.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
2 hours ago
- Yahoo
Meta Platforms (META) Unveils Advanced AI Model Focused on Physical Reasoning
Meta Platforms, Inc. (NASDAQ:META) is one of the best stocks to buy. On June 11, Meta rolled out V-JEPA 2, a refined AI model that strengthens the system's capacity to understand and predict physical gestures. The newly introduced model empowers robots and intelligent agents with stronger situational awareness and predictive skills, crucial for fostering AI systems that "think before they act." By analyzing video footage, the model developed an understanding of real-world patterns, such as human-object contact, kinetic movement, and inter-object interactions. Testing in Meta's research facilities confirmed the model could guide robots in executing actions like reaching for, lifting, and placing items elsewhere. Three new benchmarks have been released by Meta to help measure the effectiveness of current models in interpreting real-world interactions via video. By sharing these benchmarks, Meta hopes to accelerate progress in the AI research community. Meta underlined the importance of physical reasoning as a cornerstone for equipping AI systems to interact effectively with the tangible world and to attain higher levels of artificial intelligence. While we acknowledge the potential of META as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: The Best and Worst Dow Stocks for the Next 12 Months and 10 Unstoppable Stocks That Could Double Your Money. Disclosure: None.
Yahoo
6 hours ago
- Yahoo
Meta's CTO says OpenAI's Sam Altman countered Meta's massive AI signing bonuses
OpenAI CEO Sam Altman said Meta was trying to poach AI talent with $100M signing bonuses. Meta CTO Andrew Bosworth told CNBC that Altman didn't mention how OpenAI was countering offers. Bosworth said the market rate he's seeing for AI talent has been "unprecedented." OpenAI's Sam Altman recently called Meta's attempts to poach top AI talent from his company with $100 million signing bonuses "crazy." Andrew Bosworth, Meta's chief technology officer, says OpenAI has been countering those crazy offers. Bosworth said in an interview with CNBC's "Closing Bell: Overtime" on Friday that Altman "neglected to mention that he's countering those offers." The OpenAI CEO recently disclosed how Meta was offering massive signing bonuses to his employees during an interview on his brother's podcast, "Uncapped with Jack Altman." The executive said "none of our best people" had taken Meta's offers, but he didn't say whether OpenAI countered the signing bonuses to retain those top employees. OpenAI and Meta did not respond to requests for comment. The Meta CTO said these large signing bonuses are a sign of the market setting a rate for top AI talent. "The market is setting a rate here for a level of talent which is really incredible and kind of unprecedented in my 20-year career as a technology executive," Bosworth said. "But that is a great credit to these individuals who, five or six years ago, put their head down and decided to spend their time on a then-unproven technology which they pioneered and have established themselves as a relatively small pool of people who can command incredible market premium for the talent they've raised." Meta, on June 12, announced that it had bought a 49% stake in Scale AI, a data company, for $14.8 billion as the social media company continues its artificial intelligence development. Business Insider's chief media and tech correspondent Peter Kafka noted that the move appears to be an expensive acquihire of Scale AI's CEO, Alexandr Wang, and some of the data company's top executives. Bosworth told CNBC that the large offers for AI talent will encourage others to build their expertise and, as a result, the numbers will look different in a couple of years. "But today, it's a relatively small number and I think they've earned it," he said. Read the original article on Business Insider
Business Insider
6 hours ago
- Business Insider
Meta Platforms (META) Reportedly Held Acquisition Talks with Perplexity AI
Meta Platforms (META) reportedly held acquisition talks with Perplexity AI, an artificial intelligence search startup, before ultimately deciding to invest heavily in another AI company, Scale AI. According to Bloomberg, the discussions between Meta and Perplexity did not result in a deal, and both companies walked away without pursuing the acquisition. Neither Meta nor Perplexity have commented publicly on the matter. Confident Investing Starts Here: Easily unpack a company's performance with TipRanks' new KPI Data for smart investment decisions Receive undervalued, market resilient stocks right to your inbox with TipRanks' Smart Value Newsletter Instead, Meta announced earlier this month that it would invest $14.3 billion in Scale AI, which allowed it to acquire a 49% stake in the company and value it at over $29 billion. As part of the deal, Scale's CEO Alexandr Wang will join Meta to lead its new 'superintelligence' division, which focuses on developing artificial general intelligence (AGI). For context, AGI refers to AI systems that can understand, learn, and apply knowledge across a wide range of tasks at a human-like level of intelligence. This move highlights Meta's shift toward building more advanced AI systems that go beyond narrow task-based models. Founded in 2016, Scale AI helps train generative AI models by connecting them with a large network of human experts. Meta's significant investment in the company shows that CEO Mark Zuckerberg is determined to strengthen the company's position in the AI market. And Zuckerberg is not the only one, as many other tech giants have invested heavily in AI startups ever since Microsoft's blockbuster deal with OpenAI in 2023. Is Meta a Buy, Sell, or Hold? Turning to Wall Street, analysts have a Strong Buy consensus rating on META stock based on 42 Buys, three Holds, and one Sell assigned in the past three months, as indicated by the graphic below. Furthermore, the average META price target of $707.16 per share implies that shares are almost fairly valued.
