Trade of the Day: The Charles Schwab Corp. (SCHW)

by John Jagerson and Wade Hansen | December 18, 2013 9:46 am

Recent U.S. manufacturing PMI numbers came in with another big beat. This year is looking a lot like 2009-2010 for manufacturers, which is actually a very good thing for economic growth in the long run. However, in the short run this means expectations for the dreaded-taper jump up and so do yields. Normally, yields and stocks are positively correlated but on a short-term basis it can sometimes attract a few sellers who want to take profits just in case higher rates stunt growth.

When you use options trades to play the market like we do, it gives you a variety of opportunities to because there is a group that does very well when rates rise: brokers and exchanges. We’ve traded TD Ameritrade (AMTD[1]) and CME Group (CME[2]) recently, as well, but at the moment, our top contender in this space is The Charles Schwab Corp. (SCHW[3]).

We like trendline support on SCHW and are recommending calls here. This looks very much like the same situation in June and we think there is a nice opportunity for some gains through the end of the year. Investors will find SCHW attractive because higher yields are good for profits and December’s window-dressing traders will want to add some of the year’s big winners.

Buy to open the SCHW January 25 Calls (SCHW140118C00025000) for a maximum price of $0.85.

In November, we had another short-term options trade in Charles Schwab that netted us a 54% gain in just seven days. We’re very familiar with its chart and how SCHW shares move and are anticipating a move up in the near term.

 

InvestorPlace advisors John Jagerson and S. Wade Hansen are co-founders of LearningMarkets.com, as well as the co-editors of SlingShot Trader[4], a trading service designed to help you make options profits by trading the news.  Get in on the next trade and get 1 free month today by clicking here[5].

Follow John Jagerson[6] and Wade Hansen[7] at Google+!

Endnotes:

  1. AMTD: http://studio-5.financialcontent.com/investplace/quote?Symbol=AMTD
  2. CME: http://studio-5.financialcontent.com/investplace/quote?Symbol=CME
  3. SCHW: http://studio-5.financialcontent.com/investplace/quote?Symbol=SCHW
  4. SlingShot Trader: http://slingshot-trader.investorplace.com/index.html
  5. by clicking here: https://order.investorplace.com/?sid=QP7117
  6. John Jagerson: https://plus.google.com/115711248746858558308?rel=author
  7. Wade Hansen: https://plus.google.com/108450692850544646698?rel=author

Source URL: https://investorplace.com/2013/12/trade-of-the-day-schw-optionstrade/

Copyright ©2024 InvestorPlace unless otherwise noted.