Each week I use my Power Stocks scanner to find the best stocks for options trading. The ones that caught my attention this week had all of the qualities I look for in a call option—the potential for a big move up (volatility) based on technicals and past activity in the stock, and good liquidity. All of these are names you’ll recognize, and for good reason—options which do not have liquidity may trap you into a position, or prevent you from taking a large enough position to make the transaction worthwhile.
The following stocks have those qualities I look for. I’ll leave it up to you to decide which strike price and month are appropriate for your trading style, but be sure to give yourself enough time to be right. I’ve also included the support and volatility levels my scanner has detected for these stocks. The average level of volatility for these three picks is 21.
- Aetna (NYSE: AET): Support is at $51, and the volatility rating is 25; even better, Aetna is a great candidate for short-, intermediate- and long-term trades.
- American International Group (NYSE: AIG): AIG is great in the intermediate and long term, but even better for short-term trades; support is at $39, and the volatility rating is 20.
- Cigna (NYSE: CI): Support for this powerhouse is at $62, and the volatility rating is 18.
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