Buy DISH Calls to Prep for Market Recovery

September options should rise after recent sell-off


Here’s a simple, straightforward trade that is a nice intermediate-term trade for options trading investors. Buy the DISH Network Corp. (NASDAQ: DISH) September 30 Calls.

DISH has been in a nice oscillating uptrend for some time now. We think that given the chart and the fundamentals, this steady climb will continue. Therefore, getting into this trade involves two tactical considerations: strategy and timing.

Strategy: This is a momentum play, but a slow-and-steady momentum play. The options month needs to be far out enough to let this trade breath. The strike needs to be near-the-money. DISH closed at 29.03 on Friday. Too far out-of-the-money lessens the chance of success. The ideal play here is to buy the September 30 calls for 1.90 or less. This trade has less risk premium, a reasonable chance of success and enough time for the trade to come to fruition.

Timing: We have got a nice little trough in this uptrend. The recent market pullback presents itself with a nice opportunity to get into the trade, timing the market reasonably well. With a market recovery and uptrend continuation, these calls have the potential to show a nice leveraged profit over the next few months.

Dan Passarelli of writes the Market Taker Edge options newsletter. Dan has more than 17 years’ experience in the options industry as a market maker, Options Institute instructor and author of “Trading Option Greeks.”

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