It would seem to go against what every options investor knows–that volatility is great for options. But I love to buy options on stocks that are sleeping. Think about it–stocks that are “sleeping,” that is, stuck in a trading range, have the most potential for surprise profits.
When I look for options, I always look at stocks that are stuck in a channel technically, but have been volatile in the past, and are just breaking out. That tells me that there’s change in volatility. Usually then the option is still underpriced. The longer the trading range, the better.
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Ken Trester is editor of the popular Maximum Options program. Trester has been trading options since the first exchanges opened in 1973 with a winning streak that goes back to 1984 with money-doubling average annual profits since 1990.