In a seasonally strong July, market indexes follow seasonality upward. Looking for charts that hold into the end of August and the beginning of September, the choice is NextEra Energy stock.
This short-term trade should get closed in the last week of August before rotation potentially begins.
Long Call Spread: NextEra Energy Stock
The call spread forms with a long call and a short call further out of the money. The short call in NextEra Energy stock will finance the long call. As prices rise, the long call rises quickly in price and as the short strike is further away, the short call increases more slowly, creating a profit cushion for the trader.
Here are the details of the trade in NextEra Energy stock:
- Buy to open one Sept. 19-expiring 72.50 call
- Sell to open one Sept. 19 82.50 call
This long call spread carried a debit of $3.93 per share in recent trading. The trade costs $3.93, or $393 per set of option contracts in NextEra Energy stock. To calculate break-even price, add the $72.50 strike price and the cost of the trade to get 76.43. The risk potential: a debit of $3.93 plus the cost of executing the trade.
To figure out the total potential profit, use the distance between the strikes less the cost of the spread. So, we get $10 – $3.93 (the cost of the call spread) = $6.07, less commissions.
Identify Key Chart Levels
The relative resistance zone in NextEra Energy stock sits right around 85; support sits near 65. Statistically speaking, this stock has performed well through July and August. It has also recovered well since news suggesting it may not perform well. NextEra Energy stock has also been making higher lows on the weekly chart.
Here are a few possible ways to leave the trade. First, hold the position until around the first week of September 2025. Close the trade at the middle of the week from a seasonality perspective.
Second, close the trade at a predetermined profit event. This might be 25%, 50%, or more. This is a personal choice. I would prefer to look at price action behavior near $80.
Finally, set an alert for NextEra Energy stock at 70. Losing this price level suggests it's time to close the trade. Alternatively, set an alert for a spread price of $2.00; losing this price spread also suggests closing the trade.
Anne-Marie Baiynd is a 25-year veteran trader of stocks, options and futures and is the author of "The Trading Book: A Complete Solution to Mastering Technical Systems and Trading Psychology." You can find her on X at @AnneMarieTrades, Sirius Business Radio, Investors Business Daily, the Benzinga Pro platform as well as Topstep on YouTube
