Relative Strength Soars On Medtronic Stock. Here’s How To Get Bullish

Medtronic (MDT) stock jumped 2% on Monday as it broke out to a 52-week high and is showing signs of strong accumulation.

Medtronic stock recently received an RS Rating upgrade from 67 to 82 making it a great stock to consider for a bullish option trade.

Investors interested in taking some bullish exposure can do so with much lower risk through a bull call spread.

Debit Spreads Favored With Low Implied Volatility

A bull call spread involves buying a call and then selling a further out-of-the-money call. Selling the further out-of-the-money call reduces the cost of the trade but also limits the upside. Implied volatility on Medtronic stock is very low which is favorable for debit spreads, like the bull call spread and bear put spread.

A March 20, 105-strike call option traded around $5.25 this morning, and the Mar. 20, 115 call was around $1.60.

Buying the 105 call and selling the 115 call creates a bull call spread. The trade cost would be $365 (difference in the option prices multiplied by 100), and the maximum potential profit would be $635 (difference in strike prices, multiplied by 100 less the premium paid).

A bull call spread is a risk-defined strategy. If Medtronic stock closes below 105 on Mar. 20, the most the trade can lose is the roughly $365 premium paid.

Potential gains are also capped above 115, so no matter how high Medtronic stock might go, the most the trade could profit is $635.

Managing The Trade

The breakeven price for the trade is equal to the long call strike plus the premium. In this case, that equals 108.65.

In terms of trade management, if the stock dropped below 95, or if the spread value dropped from $365 to $185, I would consider closing early for a loss.

The 95 level coincides with the current level of the 50-day moving average.

Cutting losses at 50% of the premium paid helps preserve capital for future opportunities while preventing small losses from becoming large ones.

Ratings Review For Medtronic Stock

Investor’s Business Daily gives Medtronic stock a Composite Rating of 84 out of a best-possible 99, an Earnings Per Share Rating of 56 and a Relative Strength Rating of 83. According to IBD Stock Checkup, Medtronic ranks first in its Medical – Products group. 

Medtronic is a global health care technology company with its headquarters in Ireland and originally founded in 1949 in Minneapolis.

It develops medical devices and therapies that treat more than 30 chronic conditions, including heart disease, diabetes, neurological disorders, and spinal issues.

In fiscal year 2025, Medtronic reported revenues of about $33.5 billion and continues to expand patient access, serving over 79 million people worldwide while advancing sustainability and innovation goals

Please remember that options are risky, and also that investors can lose 100% of their investment. 

Gavin McMaster is founder and operator of Options Trading IQ, which offers instruction on how to buy and sell options. Follow him on X/Twitter at @OptiontradinIQ.

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