Sponsored By:

Trade of the Day: Terex (TEX)

Try TEX for downside profits

   

Though my internal indicators are still within a bullish-to-neutral range, after last week’s selloff, traders would do well to prepare themselves for the coming bear. That means stepping up your put options, and making sure you get a good price.
My recommendation is to buy Terex (TEX) October 23 Put options at $1.40 or lower. This is a manufacturing company that’s been on the decline since the beginning of June. On Friday, there were a handful of fills around $1.80, but it’s best to wait for it to drop down again for maximum profits.

After entry, take profits if the stock price hits $24 (Friday’s close was $26.45) or if the option price $2.60. Exit if the stock price closes above $29.90 or the option price reaches $1.00.

Remember, if a profit target is hit intra-day, exit and take profits immediately. If the position closes at or below the stock-based or options-based stop loss, exit the trade the next morning at the open.

Additionally, if an option has neither hit the stop-loss nor the target within three weeks of entry, close the position. I do not recommend holding an option play for more than three weeks.

InvestorPlace advisor Ken Trester has launched Power Options Weekly. This brand new weekly service delivers 5 new trades to you each Friday. It’s the perfect ‘bridge’ between investing in ordinary stocks and the turbocharged world of options trading. 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 Power Options Weekly today and receive 2 weeks for the price of 1 for only $19.95.


Article printed from InvestorPlace Media, http://investorplace.com/247trader/trade-of-the-day-terex-tex/.

©2014 InvestorPlace Media, LLC

Comments are currently unavailable. Please check back soon.