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5 Call Contenders: Financial Stocks

Several banking stocks are following what I call a "reestablished buy" pattern


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 bank and financial 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 levels my scanner has detected for these stocks.

  • American Express (NYSE:AXP): This stock has confirmed its upward trend after a temporary pullback, which is one of the most reliable signs of a continued uptrend. Support level is at $61.
  • Cincinnati Financial  (NASDAQ:CINF): CINF is displaying the same pattern as AXP—it is in a long-term upward trend that has just recovered from a dip. Support level is at $43.
  • H&R Block (NYSE:HRB): HRB has leveled after a dramatic advance. Watch for it to break through resistance at $26—your calls will accelerate in value at that point. Support is at $23.
  • Tri Continental (NYSE:TY): Like AXP and CINF, TY is showing that “reestablished buy” pattern I like so much. Support is at $17.
  • Citigroup (NYSE:C): Citigroup is in a strong upward trend, with excellent upside. Support is at $34.

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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