Trade of the Day: Smith and Wesson (SWHC)

Politics aside, this gun maker is setting up for a tradable move

   

The U.S. markets seem to be letting out a sigh of relief Wednesday to have both the Fiscal Cliff uncertainty and holiday trading behind them. That said, despite even the biggest rally, there are always going to be sectors and stocks that falter. There is still a lot of anxiety and fear surrounding the gun makers like Sturm, Ruger & Co. (NYSE:RGR) and Smith and Wesson (NASDAQ:SWHC) and where there is strong investor sentiment, there is an opportunity for traders.

Regardless of your political stance, my Power Options system is able to comb the entire universe of stocks and options to uncover which ones are most likely to move up or down without any emotional or personal bias, and it has determined SWHC is poised for an additional move down before March expirations.

Buy the SWHC March 8 Put options at $1.00 or lower. After entry, take profits if the stock price hits $6.90, or the option price hits $1.60. Exit if the stock price closes above $8.90.

Don’t be afraid to use the counter-trend to your advantage: You can use today’s upswing in the stock to get positioned at a discount.

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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