One of the more traditional trade setups is the Breakout play – where price approaches a key Resistance line and breaks up through it. The setup involves watching the key level and looking for volume as it breaks out. A cooperating market is helpful, lol.
One such setup I am looking to play in $MPEL. Here is the Daily chart:
My trade is to sell the May 22 Put at $.30 — I will use the proceeds to either buy a Call Spread or this gives me a low entry cost of 21.70 if Put the stock at expiration (if a breakout back-test occurs for example).