As I was using my Power Stocks scanning program to take a look at the market, the chemical stock sector caught my attention. Several names in this area had all of the qualities I look for in a call option—the potential for a big move up (volatility) based on technicals and past activity in the stock, and good liquidity. All of these are names you’ll recognize, and for good reason—options which do not have liquidity may trap you into a position, or prevent you from taking a large enough position to make the transaction worthwhile.
I’ll leave it up to you to decide which strike price and month are appropriate for your trading style, but be sure to give yourself enough time to be right. I’ve also included the support and volatility levels my scanner has detected for these stocks. An average volatility is considered to be 20.
- Air Products & Chemicals (NYSE:APD) is trading a few dollars above support at $87. Volatility for this stock is well below average at 14.
- Dow Chemical (NYSE:DOW) is a true-blue chip that is showing signs of a rally. Support for the stock is at $32 and volatility is about average at 20.
- DuPont (NYSE:DD) is a powerhouse stock, one of the strongest I have under surveillance. Support lies at $50 and volatility is rated 20.
- W.R. Grace & Co. (NYSE:GRA) is trading close to $80, but has support at $76 and average volatility.
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