-
Forget about “Transformers: Revenge of the Fallen” or “Harry Potter and the Half Blood Prince,” if you want to see the summer’s real blockbusters,
then you’ve come to the right place.Our OptionsZone experts have put together a list of the options trades they think will be the summer’s smash hits. Trust us, these are trades you
don’t want to miss.Keep reading to get 10 blockbuster options trades.
-
#1 The Walt Disney Co. (DIS)
By Nick Atkeson and Andrew Houghton
The Pixar movie “Up” earned $68.2 million in tickets at North American theaters on its opening weekend, and it became the first film of the summer
to hold at No. 1 for two straight weeks at the box office. Would you expect anything less from Pixar?This blockbuster gives us a clue about where Pixar owner Disney’s (DIS) stock is headed
… up! With its ironclad brand, its lock on children’s entertainment, and the fact that DIS is trading at 13 times next year’s $1.88 estimate, we believe
the stock is poised to be a summer blockbuster.On May 6, DIS reached $26 per share. If the stock is able to break out above this resistance
level, we should have a runaway hit on our hands. Buy the DIS Sept 26 Calls (DISIZ).
-
#2 Wells Fargo (WFC)
By Michael Shulman
Wells Fargo (WFC) is the last great, pure commercial bank, right? Wrong! It’s a train wreck
with a valuation twice that of the sector thanks to the fact that Warren Buffett owns some of the 4.4 billion shares outstanding.What analysts and optimists are missing is the more than $1.5 trillion — with a “T” — off-balance-sheet assets that, due to a change in regulation,
must be put on the books as of Jan. 1. Once that happens, WFC must raise a lot of capital.The stock is currently trading in the mid-$20s. It is worth $6-$8 over time. Your best bet is to buy very long-term put options on WFC.
I think Wells Fargo may be the short of the decade — find out why.
-
#3 ChinaTel Group Inc. (CHTL)
By Toby Smith
Telecommunications engineering and construction services provider ChinaTel Group Inc. (CHTL)
is my favorite China infrastructure play. I own a ton of CHTL for one reason: It is selling a 49% interest in the stock for nearly $3 a share, which
is the private market valuation for its joint venture with CECT-ChinaComm Communications, China’s fourth-largest telecommunications carrier. Yet the
publicly traded 25% of the stock is valued at less than $1 a share!CHTL has a government permit that allows them to build and run a broadband wireless network. With more than 400 million consumers in its licensed
spectrum and the best technology in the world in WiMax, I think CHTL will be a $3 stock by year-end.Don’t gamble away your profits. Learn when to exit an options trade.
-
#4 Hasbro (HAS)
By Nick Atkeson and Andrew Houghton
On July 20, Hasbro (HAS) reported better-than-expected earnings, and the stock jumped up
about 6%. Part of the reason for the performance was the sale of Star Wars action figures in the wake of the release of “Star Trek XI.” As they say,
more of a good thing is a good thing. With the release of “GI Joe: Rise of the Cobra” in August, HAS should see another boost to its business.Buy the HAS Oct 27.50 Calls (HASJY). If the stock returns to where
it started the year, we could see about 200% appreciation action in these options.Discover 10 Secrets of Successful Options Traders.
-
#5 Cepheid (CPHD)
By Michael Shulman
Cepheid (CPHD) is a diagnostics company that develops, manufactures and markets integrated
systems for genetic testing. It has a lock on more than 90% of the market for new systems for diagnosing MRSA (the killer staph bug) and other hospital-acquired
infections (HAIs).As of Oct. 1, Medicare will no longer pay for HAIs — except for MRSA. So hospitals will have an added incentive to diagnose patients quickly. CPHD’s
testing system does it faster, better and cheaper than any of its competitors’ tests, and its lead in this market is widening. Buy CPHD call options,
but be careful as they are very thinly traded.Cepheid is one on my 6 Bargain Biotech Stocks.
-
#6 Express Scripts (ESRX)
By Chris Johnson and Jon Lewis
Express Scripts (ESRX) offers pharmacy benefit management services, which is a hot area
to be in right now. That may be why analysts expect a healthy 13% increase in profits this quarter when EXRS reports on July 29. The company has met
or beaten the consensus earnings estimate for nine straight quarters. And in three of the past four quarters, the stock has gained between 5% and
6% the day following its report.Technically, the shares are rising along the support of their 50-day moving average, a trendline the stock just bounced off of. Buy the EXRS
Aug 65 Calls (XTQHM) or EXRS Aug 70 Calls (XTQHN).
-
#7 Zions Bancorp (ZION)
By Toby Smith
The banks that have been prudent lenders and protected their balance sheet during these turbulent times will grow market share and be obscenely
profitable as the recovery takes hold next year. But one bank that will not fare so well is Zions Bancorp (ZION).
I expect ZION to be wiped out in a sea of bad commercial and residential real estate loans. It now faces the writing off of billions of dollars in
accrued interest that it has been holding onto for 2009.Even with TARP money, ZION is a dead duck. Buy the ZION Sept 10 Puts (ZNQUY).
-
#8 GameStop Corp. (GME)
By Nick Atkeson and Andrew Houghton
Mike Newell is directing the big-screen version of the “Prince of Persia: The Sands of Time” video game, which could easily be an Indiana Jones-type
film. And it certainly should help sales of the underlying video game. The video game is made by independent French company Ubisoft, and is played
on Xbox 360 and PlayStation 3. There is no public market way to buy Ubisoft, but we can play gaming retailer GameStop (GME).
By the way, GameStop also sells the GI Joe video game.With the summer’s blockbuster films promoting the blockbuster games, we recommend buying the GME Oct 24 Calls (GMEJM).
-
#9 Gilead Sciences (GILD)
By Chris Johnson and Jon Lewis
Gilead Sciences (GILD) reported earnings on July 21 after the close. By all accounts,
it was a great report. Revenue and profits beat expectations, and the company raised its revenue guidance. But the market appears cool to the shares.
Perhaps it was a “sell the news” reaction.That’s OK by us. Maybe the shares got a little ahead of themselves before earnings. A pullback will make this an even better call play. Buy the GILD
Aug 46 Calls (GDQHT).
-
#10 BioCryst Pharmaceuticals (BCRX)
By Michael Shulman
Winter flu season will also be the season for swine flu. BioCryst Pharmaceuticals (BCRX)
is a tiny company that is currently conducting trials for a flu treatment called Peramivir that is much more powerful than Tamiflu, which is currently
used to treat swine flu. And Peramivir can be bought for a national stockpile. The company may sell its product to Uncle Sam; it may not. The whole
world is watching.This is a very high-risk trade, as the stock is already up sevenfold. Buy calls if you believe that Uncle Sam will come through. Buy puts if you
do not. If you’re on the right side of this trade, you stand to make a small fortune.For more trading ideas, see:
- 4 Stocks Set to Take Wall Street by Surprise
- 6 Bargain Biotech Stocks
- The Best Alternative Energy Stocks Out There
The old ways of investing don’t work anymore. But trading options founded on scientific principle can and does work in volatile times like these.
In his latest report, learn how John Lansing leverages the power of technical analysis to identify the short window when a trade is set to go straight
up or down. Get your FREE copy here!
