My scans communicated a message loud and clear to me: Communications equipment companies are on the rise.
My program rated JDS Uniphase (NASDAQ:JDSU) and Harris Corp. (NYSE:HRS) with strong outlooks for the near-term (one to two weeks), but a word to the wise: Their prospects wane after the September window closes.
Still, two weeks is plenty of time to turn a profit. That said, I don’t see any options that are undervalued for JDSU right now, so market makers also are clued into the probability of it rising. But I did uncover one underpriced options gem in HRS:
Buy the HRS Nov 50 Calls at $1.60 or lower.
Take profits if HRS stock hits $52.10, at which point the option should be $3.10. Cut your losses and get out if the stock price closes below $48.20 or the option hits $1.10.
These options are in the money now, so take advantage of any midday dips in HRS to get into the calls. At current prices, the options are trading at about 10 cents higher than I’d like, so you’ll need to use a limit order to ensure you get filled at my $1.60 level.
Paying the correct price is critical. If possible, pay less than the recommended value. By paying only the fair and recommended price, or lower, you keep your losses low and maximize your profits — something I am sure you want.
Ken Trester is editor of the popular Maximum Options program. Trester has been trading options since the first exchanges opened in 1973.