A Broadening Rally Heading Into Month-End
As April draws to a close, the equity market is delivering an encouraging picture despite a backdrop of macroeconomic headwinds. Earnings have become the dominant narrative, and the response from investors has been overwhelmingly positive. While there have been a few outliers — Meta, in particular, stood out unfavorably in the most recent batch of reports — the overall momentum is impressive. Big names such as Alphabet are putting in strong sessions, but more importantly, the rally is broadening. Equal-weight indices are showing strength, signaling that participation is no longer confined to a narrow group of mega-cap technology stocks. Other sectors are joining in with higher price action, and that breadth is one of the most constructive signals a trend follower can ask for.
Against that backdrop, three names stand out as compelling setups, each with a defined-risk options strategy that takes advantage of upcoming earnings catalysts: Costco (COST), CVS Health (CVS), and Marathon Petroleum (MPC).
Costco: Coiled for a Breakout Toward Recent Highs
Costco has been quietly building momentum and looks ready to challenge its recent highs. After bottoming near 844.06 following the December earnings, the stock staged a sharp rally before settling into a sideways drift between roughly 965 and 1,028. In the very short term, two converging trend lines describe a textbook symmetrical triangle. Periods of compressed volatility like this often resolve into periods of expanded volatility, and a break beyond either boundary tends to produce energetic follow-through.
The moving-average picture supports the consolidation thesis. The 5-day and 21-day exponential moving averages are clustered right around the 1,000 level, while the quarterly EMA sits near 987 — a level that recently provided support and remains a near-term floor. The RSI traces a similar triangular shape with only a slight bullish lean above the 50 midline, meaning a break of the trend line should ideally be confirmed by matching strength in momentum. The volume profile reinforces this read: heavy trading concentration sits between 970 and 1,015, with the point of control at 978. Above 1,015, volume thins out dramatically, leaving the door open for fast-moving prices.
With earnings due at the end of May, the trade structure needs to balance upside participation with risk control on a stock priced near $1,000. A June call butterfly fits the bill — buying the 1,000 strike, selling two of the 1,040 strike, and buying one of the 1,080 strike for roughly $7. The premium paid is the maximum risk, while the structure captures the zone back up toward those recent highs if earnings come in respectably.
CVS Health: The Last Brick-and-Mortar Pharmacy Standing
CVS Health offers a very different kind of chart, but one that is arguably more compelling than the wreckage of Walgreens or Rite Aid, both of which have long since been left in the dust. CVS has held in well, providing useful diversification away from the technology-heavy leadership and putting itself in an interesting structural position.
The stock is pressing against an old intraday high near 84 — a level that capped price in early January and again recently. That makes 84 the obvious breakout pivot. A push above it could trigger a cascade of buy orders and produce the kind of runaway move that traders watch for. To the downside, a gap near 82.50 marks where today’s session lows formed, and 81.68 stands out as a previous high that buyers may now defend. An upward-sloping trend line connecting a series of lows remains intact.
Only the 5-day EMA is in close proximity to current price near 81.50, while the 21-day EMA is starting to converge with the trend line — a confluence to monitor on any pullback. RSI is on the verge of pushing into overbought territory; far from a warning, a move into overbought territory while price breaks to new highs would be exactly the bullish confirmation a trader would want in a trending name. The volume profile shows a meaningful concentration between 76 and 80, with a point of control near 78. Price is holding above that heavy-trading zone and pushing into untested territory above.
With earnings on May 6 and implied volatility elevated, the chosen approach is a buy-write: own the stock outright as a longer-term hold, and write the June 90 call for about $1.60. That collects roughly 2% in premium over the next 49 days while still leaving room to capture upside if the stock breaks above 84 post-earnings. The premium effectively reduces the entry cost on a name worth holding for the long haul.
Marathon Petroleum: Riding Geopolitical Tailwinds
Marathon Petroleum saw a meaningful pop on the back of geopolitical pressure points — developments in Venezuela and the Middle East — followed by a natural pullback after that strong run. The stock now appears to have stabilized and looks capable of mounting another move higher, supported by both the technical setup and longer-term fundamentals.
The relevant trend line begins where the stock opened after its last earnings report — earnings often justify resetting trend lines — and connects subsequent lows in a consistent rising channel. The price action has now sharpened into a steeper rally heading into the next earnings event. The zone between 250 and 256 stands out as the next resistance ceiling, and a break through it would carry the stock into significant new highs. To the downside, 228 is a former high that later acted as both a low and resistance, and 210 plays a similar role as a prior pivot point.
The 5-day EMA sits near 236.32 and the 21-day EMA around 229.40. RSI is testing a downward-sloping boundary line and approaching overbought territory — again, the kind of behavior a bullish trader wants to see if it accompanies a breakout. The volume profile lacks a singular dominant node, instead showing a general area of heavier concentration between 220 and 240. Price is holding above that concentration zone, and a decisive move beyond it tends to provide a stronger directional clue, since these zones often act as consolidative anchors.
With earnings on May 5, the chosen structure is a risk reversal — selling a put below the market and buying a call above it. The setup creates an opportunity to be put long the stock at a more attractive level on any post-earnings weakness, while still capturing upside participation if the breakout extends. The cash outlay is modest, and the trade buys time to see how the post-earnings landscape unfolds. For a stock with this combination of momentum and fundamental support, picking shares up below the current price is a perfectly acceptable outcome.
Common Threads
Each of these three setups shares a unifying logic: a stock approaching a meaningful technical inflection, an upcoming earnings catalyst that can supply the energy for resolution, and an options structure designed to define risk while preserving upside. Costco uses a call butterfly to target a specific upside zone for a triple-digit-priced stock. CVS pairs stock ownership with covered-call income to reduce cost basis on a longer-term hold. Marathon employs a risk reversal to express directional conviction with minimal capital outlay. Different vehicles, but the same underlying philosophy — let the chart and the earnings calendar dictate the timing, and let the options market dictate how to size and shape the risk.