The floor of the CME hasn't looked like this in years. But that doesn't seem to matter to the stock price. It has taken flight out of a Cup-and-Handle on the way to a target at 100. But with the market's current pullback, CME Group's (NASDAQ:CME) stock price has also pulled back and is testing support of both a rising trend line and the basing platform from early December. You like the trend and want to hold it for that 100 touch, but it's looking weak.
What to do?
One option is to protect your trade by flipping it to an options trade. By selling the stock and buying a February 6 Expiry 87 Strike Call (offered at $2.80) you reduce your exposure to the price of the option. Adding a 1×2 Put Spread can give you downside participation just in case the support areas can't hold it. And you can do that for no more than the cost of margin. And interest rates are still at zero, right?
Buying a February 6 Expiry 87/85 1×2 Put Spread, buying one 87 Put and selling two 85 Puts gives participation down to 85 and a possible entry below that back into the stock at a price basis of 83.
And that's right at a retest of the top of the Cup and the November low.