Home improvement giant Home Depot (HD), one of the blue-chip icons, is generally seen as a solid investment regardless of economic conditions. It pays dividends, if not sensational ones, and its offerings are essential. However, HD stock has not performed well this year, losing about 6% since the beginning of the year. Still, the wind may be changing.

First, sentiment appears to be improving in the homebuilding sector. Industry giants Toll Brothers (TOL) and KB Home (KBH) had a strong start on Monday. Both stocks have also gained momentum over the past five sessions, with the former up more than 5% and the latter up about 4%. Even some real estate listings majors, such as Zillow Group (Z, ZG), have been higher in recent sessions.

To be sure, the real estate market is a complex beast. Data released last month by the National Association of Realtors showed that U.S. home sales fell to a six-month low in April as high interest rates curbed buyer confidence. Adding to the confusion is uncertainty about when (or if) interest rates will fall. In May, Fed Chair Jerome Powell said monetary policy was “in a good place” and that the central bank would wait for more clarity.

Much of the uncertainty is driven by President Donald Trump’s tariffs, which have shaken up various segments of the business community. At the same time, the administration has made progress in securing what it sees as more favorable terms, and that has produced tangible results. For example, Boeing (BA) is set to resume deliveries to Chinese airlines after a month-long pause due to escalating trade tensions. By logical inference, it’s not too far-fetched to assume that some negotiations could take place on lumber tariffs, one of the key issues affecting home builders. Trump has been vociferous throughout the implementation of the tariffs, but he has also backed down from his aggressive stance. So it may not be all bad for HD stock.

On a side note, Home Depot still benefits from daily demand. Pipes don’t care whether economic conditions worsen; when they’re going to break, they break (and often at inconvenient times). The urgency of the business – by offering plenty of brick-and-mortar stores – also helps ease pressure from online competitors. The statistical framework looks good for HD stock.

While narratives provide context and color for those with a long-term investment perspective, they are not always detailed enough for traders. Wall Street analysts like to give 12-month target prices because they give the thesis breathing room. In such cases, the “why” of an investment is central. But for traders, the focus is on the “how” – how much, how fast, and how likely.

For options traders in particular, a multi-layered risk profile requires more precise data. While options provide leverage, they also expire at the same time, multiplying relatively small returns in the open market for large payouts in the derivatives market. This means that a trade must be profitable in terms of both the target price (y-axis) and the allotted time period (x-axis).

As a result, probabilities represent a central concern among options traders. The problem is that basic statistical analysis for deriving probability matrices cannot occur without stationarity; that is, the benchmark must be temporally consistent. Unfortunately, both fundamental and technical analysis face the problem of stationarity, as valuation and price (and price derivative) metrics often change over time.

What is consistent over time is the market breadth, the sequence of cumulative and distributive sessions. Market breadth is essentially a proxy for demand, and demand is binary – it either happens or it doesn’t. Therefore, demand profiles can be easily categorized and measured, lending themselves to statistical rigor.

Over the past two months, HD stock has printed an “8-2-U” pattern: eight up weeks, two down weeks, a net positive trajectory over the 10-week period. This pattern has occurred 31 times over the past decade. In 61.29% of cases, the following week’s price action ends up bullish, with a median return of 1.23%.

If the effects of 8-2-U play out as predicted, HD stock could potentially rise to $371.79, based on last Friday’s closing price of $367.27. If the bulls maintain control of the market, an attempt to push the price toward $375 is possible in the next three weeks. Aggressive leverage to support a boring name

Number-crunchers might consider the 365/370 bull call spread that expired on June 27. This trade involves buying a $365 call option and simultaneously selling a $370 call option, resulting in a net payout of $290. If HD stock rises above the short strike price at expiration, the maximum reward is $210, representing a payout of over 72%.

The above probably represents the most aggressive trade with a high chance of making a profit. But for those who really want to hit it big, there is another spread: the 370/375 bull spread that expires on June 27. This trade requires a net debt of $220, but the maximum reward is $280 (if HD moves above $375 at expiration), which translates to a payout of over 127%.

It all depends on risk tolerance. Looking at the empirical data, a target price of $372 seems reasonable based on median performances following the 8-2-U sequence. However, the median also means that the actual number could come in higher or lower. This is a possibility, not a guarantee. As a final note, though, HD stock has a 55.51% chance of going up in any given week. Therefore, the current demand profile offers a positive rate of 5.78 percentage points. Again, while this does not guarantee an upside, it does encourage a debt-based options strategy.

The information, comments and recommendations contained herein are not within the scope of investment consultancy. Investment consultancy services are provided within the framework of the investment consultancy agreement to be signed between brokerage firms, portfolio management companies, banks that do not accept deposits and customers. The comments in this article are only my personal comments and these comments may not be appropriate for your financial situation and risk return. For this reason, investments should not be made based on the information and comments in my articles.