Double Your Money Every Week in 2010
- It’s almost kickoff time for America’s most-watched sporting event to get under way. That’s right, the Super Bowl is nearly upon us, and on Sunday
the Indianapolis Colts will do battle with the New Orleans Saints in what football fans suspect will be an epic contest featuring two supercharged
offenses.Of course, when you’re trading options, every day has the potential to be an epic contest — and every day gives you the opportunity to play offense
with your trades. In fact, in the options game, you’re always confronted with choices that can help you score touchdowns with your portfolio — but
only if you call the right plays. So, in the spirit of this weekend’s gridiron rumble, here are six winning Super Bowl options trades that could give
your portfolio a shot at the Lombardi Trophy.
Double Your Money Every Week in 2010
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#1 Apple (AAPL)
By Michael Shulman
The Who will be headlining this year’s halftime show. If you are two old or too young to know who The Who are (they are not on first base), they
are a rock group long past their initiation date with the AARP, but great nonetheless. Barring a wardrobe malfunction, they will rock the house, and
the too young and too old will go to, you guessed it, Apple (AAPL) iTunes
to download some of the best rock music ever.AAPL is currently selling at half its historical valuation, and the success of its iconic brand is nowhere near over, so consider going long AAPL
here with call options.
Double Your Money Every Week in 2010
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#2 WellPoint (WLP)
By Chris Johnson and Jon Lewis
Health care plan provider WellPoint (WLP) is one of three Fortune
500 companies based in Indianapolis, home of the AFC champs, the Colts. This sector has had a solid Q4 earnings track record, with most companies
exceeding Wall Street profit estimates. However, most are also issuing cautious outlooks for 2010. The conventional wisdom has been that health insurers
should do better as long as the path to healthcare reform gets stickier. With Democrats no longer holding the Senate majority needed to ramrod legislation
through, health care reform is in jeopardy. (Get 5
Ways to Profit From the Massachusetts Election.)WLP retreated to its 20-day moving average, an ascending
trendline that has supported several pullbacks during a three-month rally that saw the stock gain more than 50% in value. Should the market stabilize,
look for health care insurers to be a leader moving forward, and WLP should serve as an excellent proxy for the sector. We consider this a longer-term
play, so we’d suggest buying in-the-money WLP June 60 Calls to capture some upside for the first half of 2010.
Double Your Money Every Week in 2010
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#3 Allergan (AGN)
By Michael Shulman
NFL cheerleaders are perfectly tan, have perfect hair, perfect teeth, and no body fat … and when they bend over to shake their pom-poms,
their other poms do not shake. But other than cheerleaders, celebrities and the very wealthy, who is going to spend money on cosmetic surgery in this
economy?The market leader in breast augmentation is Allergan (AGN), and I
don’t see their revenues being real, uh, robust this year. Consider buying put options on the stock.
Double Your Money Every Week in 2010
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#4 Shaw Group (SHAW)
By Chris Johnson and Jon Lewis
Shaw Group (SHAW) isn’t based in New Orleans, home of the Saints,
but it is nearby in Baton Rouge. So it’s close enough, and it looks like it could be a winner. The company provides various construction and engineering
services to an array of industries, utilities and government agencies. For example, the Air Force just awarded SHAW an environmental restoration and
construction contract that extends through 2014.The heavy construction industry took its lumps during the recession, but the dark days appear to be behind the sector, as money — both public and
private — should begin flowing more freely into major construction and infrastructure projects. Two areas that SHAW is well-positioned to benefit
from are clean energy and nuclear power. The company is actively pursuing contracts to upgrade existing nuclear facilities, work that could generate
several billion dollars in revenue. Also, President Obama called for more investment in clean energy, and that plays very well into SHAW’s expertise
in constructing plants and transmission systems.This will not be a quick-turnaround play. Money is leaking out slowly and trimming the deficit is a hot topic right now. But the long-term view
favors SHAW and other construction firms such as Foster Wheeler (FWLT)
and Fluor (FLR). As such, we recommend playing the SHAW Jan
2011 35 Calls. By then, SHAW will likely have inked a few major contracts that should boost its bottom line.
Double Your Money Every Week in 2010
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#5 Buffalo Wild Wings (BWLD)
By Michael Shulman
Even the people who don’t like football or hate the teams playing love a good Super Bowl party. And a staple at any of these shindigs is buffalo
wings.American Indians may not have noticed that buffalo have wings, but we eat them with passion! In America, cheap food sells, especially during a recession.
Take a look at call options on Buffalo Wild Wings (BWLD), and let
me recommend barbecue ones.
Double Your Money Every Week in 2010
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#6 PowerShares Golden Dragon Halter USX China (PGJ)
By Michael Shulman
The Super Bowl is a domestically manufactured, uniquely American institution, but the Chinese are trying to figure out how to export a Super Bowl
that is cheaper than the one made in the USA. They have hacked into our computer systems, stolen plans for celebrations, dislocated tens of thousands
of people from their homes to build large mock-ups of the stadiums in the United States, but all to no avail.All kidding aside, China is reining in bank stimulus and this will hurt its market. Buy puts on a China ETF like the PowerShares Golden
Dragon Halter USX China (PGJ) to take advantage of this trend.Related Articles:
- Top 6 Stocks for February
- The 5 Cheapest Options Strategies
- Why You Should Never Trade a Stock or ETF Again
Double Your Money Every Week in 2010
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