An options trading recommendation from an InvestorPlace expert.
Recommended Fast Options Trade: SRA International (NYSE: SRX)
SRX is holding up well in a volatile market thanks to persistent buyout rumors. It made a big move up in January and tested support a few times since then. It could move higher again if the buyout rumors prove to be more than just rumors. Here is the best way to play more strength in SRA International …
Buy SRX Jun 30 Call up to $1.6 ($160 per contract).
After taking the position, enter a good-til-cancelled contingent order to sell this option if the stock hits its target price of $30. That should give you an option price of about $3, for an 87% profit.
Close this position and cut losses if the stock closes below $25.60, when the option price should be about $1.10. The stock is currently trading at $27.14. The computer-simulated probability of this option hitting its target price is 30%.
Recommended Fast Options Trade: Oshkosh Corp. (NYSE OSK)
OSK broke below support at its 50-day moving average and also at $35. It is now sitting at its 200-day moving average and could fall considerably lower if it breaks below that. Here is the best way to play more weakness in Oshkosh Corp…
Buy the OSK Jul 29 Put up to $1.10 ($110 per contract).
After taking the position, enter a good-til-cancelled contingent order to sell this option if the stock hits its target price of $30.50. That should give you an option price of about $2.10, for a 90% profit.
Close this position and cut losses if the stock closes above $35.60, when the option price should be about 80 cents. The stock is currently trading at $33.88. The computer-simulated probability of this option hitting its target price is 19%.
** All of our short-term recommendations can be taken for up to three days after they are recommended. Make sure the stock and option prices are close to where they were when we made the recommendation. If after three days you still have not gotten the position filled, cancel the order and wait for our new recommendations, as the profit probabilities may no longer be valid.
Action to Take on Current Position: Rosetta Resources (ROSE)
Close the Rosetta Resources (NASDAQ: ROSE) Apr 45 Call. The position reached its maximum three-week holding period without hitting its target price.
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.
