Reasons are plenty for the current index and indicator weakness, ranging from potential monetary policy shifts, to political and budget stalemates, to geopolitical troubles. Also, after we pass through the upcoming holiday and first week of a new month, both traditionally bullish calendar periods, September historically has not been a good month for stocks. The indexes could use the upcoming bullish time frame to launch a short-term bounce off of currently oversold conditions, but the adjective “short term” needs to be emphasized here.
One good way to play that short-term bullishness is with Cabot Oil & Gas (COG). The name may look familiar if you’ve been following Trade of the Day–my colleague Jon Markman saw an opportunity to trade the stock a few weeks ago. Now my Power Options system is showing a great opportunity for options on the stock.
The stock is currently pulling back slightly and consolidating from its August 28 high of $39.91, but even small moves can affect the option’s price. The option my system highlighted is undervalued with over a month of time value left.
Recommendation: Buy Cabot Oil & Gas (COG) October $42.50 call options at 65 cents or lower. After entry, take profits if the stock price hits $42.20 or the option price reaches $1.70. Exit if the stock price closes below $38.00 or the option price falls to 40 cents.
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