Hey traders,
Every Monday, I share trending stocks that have caught my eye for the week with me SMS subscribers.
This week, one of the tickers is EAT — Brinker International, which is the parent company of restaurants like Chili’s and Maggiano’s.
Now, if you’ve been following along, you know I don’t just pick tickers out a hat. I’m all about spotting trending stocks and finding opportunities that stack the odds in your favor.
So today, let’s take a closer look at EAT and how you might go about trading it.
Why EAT Is on My Radar
EAT has been on a steady upward trend over the past few months, showing strong resilience even as broader markets have experienced some volatility.
Compare EAT’s chart over the past 6 months…
To the S&P chart over the same time frame:
You can easily see that EAT is trading well above its key trendlines — the 20-day, 50-day, and 200-day — which is one of my favorite indicators of a healthy stock.
Meanwhile, the S&P has hit quite a few stumbling blocks along the way… and is currently trapped between its 20 and 50 day trend lines.
When a stock like this stays strong — even stronger than the broad market — it tells me that it has momentum on its side. And momentum is what we’re looking to ride.
Ways to Trade EAT This Week
1. Selling Covered Calls If you already own shares of EAT (or are willing to buy them at the current price), you could consider selling covered calls.
- Example: With EAT trading around $140.40, you could buy 100 shares of the stock and sell the $150 strike call expiring January 17th.
- Why it works: You’d collect about $1.10 in premium for selling the call, and if EAT doesn’t hit $150 by next Friday, you keep the premium and still own the stock. If it does hit $150, you still lock in gains on the shares you already own in addition to the premium you collected.
- Downside: You’d have to buy 100 shares @ about $140.40 per share, which would mean you’d need $14,040 to get started.
2. Selling a Naked Put You could sell someone the right to “put” you the stock at a price you’d be happy to own it at.
- Example: EAT is currently trading around $140.40 and its 20 day trendline is down around $133. You could sell a $135 put expiring February 21st for about $7.00.
- Why it works: You’d collect $7.00 in exchange for a promise to buy EAT at $135 if it falls to that price — or below it — by February 21st. Assuming EAT keeps bouncing at its 20 day trend line, it’s not likely that EAT will fall that far. And if it does, the $7.00 you collect will mean your cost basis is $135 – $7, which is $128.
- Downside: You’d have to have $13,500 cash or margin per contract in case you get assigned.
3. Selling a Bull Put Credit Spread Lots of folks are scared of credit spreads, but they are a great way to take advantage of a stock’s strength while managing your risk and requiring very little up front capital.
- Example: Sell the $135 put, buy the $130 put, both expiring January 17. (less than 2 weeks away)
- Why it works: You’d collect 97¢ per contract and take on $5 worth of risk. That’s a 19.4% return in just under 2 weeks.
- Downside: If EAT falls below $135 by Friday the 17th, the spread will move against you and you could lose the difference in strike prices, which is $5 per share or $500 per contract. Unlike covered calls or naked puts, after expiration, you will own nothing. So that loss is not something you can then go back and recoup by selling covered calls against the stock.
Final Thoughts
EAT is the kind of stock I love to watch — trending more strongly than the broad market, steady momentum, for multiple months in a row.
Whether you’re selling covered calls, selling naked puts, or using a credit spread, there’s an opportunity here to fit almost any trading style and almost any amount of risk capital you have.
The beauty of trading a stock like EAT in these ways is that we don’t need big, flashy moves to generate consistent returns. We’re simply stacking the odds in our favor and letting the trends work for you.
So, take a look at the chart, evaluate your risk tolerance, and decide which strategy works best for you.
As always, remember you can paper trade these setups.
You’ll get to push all the buttons, learn your trading platform and get comfortable with how the market reacts and affects your trade without risking a single dime.
Trade smart, stay disciplined, and keep looking for those high-probability setups.
Trade well,
Jack Carter
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