Trade of the Day: CIGNA Corporation (CI)

Limit your risk with cheap options

   

In the insurance sector, many stocks like Aetna (NYSE:AET) and American International Group (NYSE:AIG) are pulling back from their upward trends, but my Power Stocks system has identified one that displays good upside characteristics relative to other stocks.

For options trading, the best candidates have underlying stocks that are poised to make a breakout after trading in a channel, and CIGNA Corporation (NYSE:CI) looks to fit the bill according to the multiple regression analysis and other statistical tools of my proprietary options system.

The system also identifies appropriate targets and stop losses for the options that are most likely to be profitable—the cheap ones. Low-priced options limit your risk. If the stock price does not move according to predictions, the option will expire and the maximum you can lose is the small amount you paid for the option.
Recommendation: So that’s why I’m recommending the CI April 60 call options at $1.10 or lower. The stock price should be around $56.60 at that level. After entry, take profits if the stock price hits $59.50 or the options price reaches $2.30. Exit if the stock price closes below $55.10 or the option price falls to 70 cents.

InvestorPlace advisor 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.  Try Maximum Options today for 2 months for only $99.


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