Burlington Stores (BURL) is identified as a potential mean reversion trade after declining 17% in 17 days and reaching a long-term support level around $248. Technical analysis, utilizing MACD and RSI, suggests a constructive turn, prompting a recommendation for a defined-risk bull call spread. The proposed trade involves buying the $260 call and selling the $265 call with an October 31 expiry, targeting a 100% return if BURL finishes at or above $265.
Today's idea starts with the simplest entry criterion in the book: support and resistance. From there, I layer on a couple of my go-to indicators to confirm the signal before pulling the trigger. I'm looking at BURL (Burlington Stores Inc.) . The stock is down about 17% over the past 17 days and has now slipped into a zone where a mean reversion bounce could set up. If price holds at support and the indicators line up, this could offer a defined-risk shot to the upside. Support/resistance Note the white line on the chart — this marks a long-term support zone near $248. Over the past six months, price has reacted to this level multiple times on both bounces and fades. We're back at that juncture now, and after tagging support, BURL is printing higher highs and higher lows, suggesting a constructive turn off this area. MACD (moving average convergence divergence) The MACD is a reliable reversal gauge. While the standard (12, 26, 9) settings are popular, they can lag, so I often switch to (5, 13, 5) for a quicker read. On BURL, the MACD line (blue) has just crossed above the signal line (yellow) — my first confirmation that momentum is turning in favor of the long setup. RSI (relative strength index) RSI is a versatile momentum gauge that not only flags overbought/oversold extremes (so you're not chasing) but also helps spot reversals. On BURL, RSI has snapped higher after nearing oversold territory—an early hint that momentum may be turning back to the upside. (Like trades like these? My new algorithm is beating the benchmarks— see it in action here .) The trade setup : BURL 260-265 bull call spread To play BURL to the upside, I'm using a bull call spread — defined risk, defined payoff. With BURL around $262, the setup is: buy the $260 call and sell the $265 call as one unit. If BURL finishes at or above $265 by expiration, the spread pays its full $5.00 value—turning roughly a $2.50 debit into a 100% return. With 10 contracts, that's $2,500 at risk for a potential $2,500 gain. If price drifts a bit before entry, I'll nudge the strikes to keep them bracketing spot so the risk/reward stays optimal. Here is my exact trade setup: Buy $260 call, Oct. 31 expiry Sell $265 call, Oct. 31 expiry Cost: $250 Potential Profit: $250 — Nishant Pant Founder: https://tradewithmaya.com https://tradingextremes.com Author: Mean Reversion Trading Youtube, Twitter: @TheMeanTrader DISCLOSURES: Nishant has a BURL 260-265 Bull Call Spread expiring on Oct. 31. All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL'S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer. Burlington Stores (BURL) has recently experienced a significant 17% price decline over the past 17 days, bringing the stock to a critical long-term support level near $248. This technical juncture, identified by multiple reactions over the last six months, suggests a potential mean-reversion bounce, aligning with a detected strongly positive sentiment for the stock. Supporting this constructive outlook, key momentum indicators are signaling a potential reversal. The MACD (5, 13, 5) has registered a bullish crossover, with its line moving above the signal line, indicating turning momentum. Furthermore, the RSI has snapped higher after nearing oversold conditions, reinforcing the probability of an upward price shift. To capitalize on this technical setup, a defined-risk BURL 260-265 bull call spread expiring on October 31st is proposed. This strategy, suitable for a bullish directional play, targets a 100% return on a $2.50 debit if BURL closes at or above $265 by expiration, with the stock currently trading around $262.
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strongly positive
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0.70
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