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Trade of the Day: ConAgra Foods (CAG)

Buy calls on this food conglomerate


My Power Stocks system has rated conglomerates Olin Corp. (NYSE:OLN), Flextronics (NASDAQ:FLEX), Harsco (NYSE:HSC) and ConAgra (NYSE:CAG) as stocks to buy. And no wonder, they’ve all made gains of at least 1% in the past week—5% in Harsco’s case.

But though these stocks are looking bullish, there are only a few stocks every week that give signals strong enough to make them a candidate for profitable options trading.

So how can you trade options on conglomerate growth?

I’ve looked through the list of Power Stocks and picked out the most volatile and liquid trades. I’ve also taken stock price movement and theoretical option values into account.

It looks like ConAgra is the best bargain of the bunch, with options selling for less than their theoretical fair value.

Recommendation: Buy CAG Mar 31 Call options at 55 cents or lower, when the stock price is around $30.20. After entry, take profits if the stock price hits $31.00 or the option price rises to 90 cents. Exit if the stock price closes below $29.80 or the option price falls to 40 cents.

Though these options are inexpensive, paying the correct price is critical. Do not pay more than the recommended price.

If possible pay less than the recommended value. By doing so you’ll save money and make more.

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.

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