Given that my latest Trade of the Day focused on a defense name, it’s no surprise that my system has identified that this space is strong overall.
Several stocks in this sector have the qualities that a position in a call option requires: relative volatility, solid technicals and plenty of liquidity. I’ve also included the support and volatility levels my scanner has detected for these stocks. An average volatility is considered to be 20.
I try to buy options that are as close to in the money as possible, but that are trading at or below the $2.00 range. But remember that options should be part of an investing plan, not all of it. Keep your contracts small and make sure you’re playing with Vegas money, even though these names look strong.
- Boeing (BA) is rated as a powerhouse by my system with excellent short-term and long-term prospects. With a volatility reading of 22, it looks ready to spike. It has support at $91, so you can use that essentially as a stop loss point.
- General Dynamics (GD) is offering excellent buying with significant volatility at 28, a great potential setup for call options. Strong support resides at $72.
- Lockheed Martin (LMT) is also at an excellent buying point, but it’s strength appears to be short-term only. Don’t fiddle with LEAPs here; go for nearer-term calls. Support for LMT is at $99.
- Northrop Grumman (NOC) is another powerhouse but the caveat here is that it only looks strong for the short-term, as well, so be quick about getting in and out of your calls. Support is found at $74.
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