Trade of the Day: Olin Corp. (OLN)

Bulls, stampede ahead to OLN calls

   

While buying strong companies on strength is generally a good idea, figuring out solid bets in the options game is not quite so clear-cut. That’s why I have my Power Options system to run multiple regression analysis and other statistical tools that unearth the few stocks that are building momentum and set to make a quick burst.

Since the market appears to have paused to refresh, one of the best ways to put your money to work is with call options in Olin Corp. (NYSE:OLN), a chemical manufacturing company. My computer system rates this stock as a “reestablished buy,” which means that this stock has confirmed its upward trend after a temporary pullback. Such a bounceback is one of the most reliable signals that the stock will rise again quickly.

Recommendation: Buy OLN Aug 25 call options at $1.60 or lower, when the stock price is around $25.70. After entry, take profits if the stock price hits $27.00 or the option price reaches $2.50. Exit if the stock price closes below $25.00 or the option price falls to $1.20.

                                                                                                                                              

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