Market Outlook
Our indicators are giving bullish to neutral readings, a downgrade from last week’s all bullish readings. The change is due to our internal indicators, as the 200-day Moving Averages Index and Cumulative Volume Index have fallen below their 50-day moving averages. In fact, the 200-day Moving Averages Index has also fallen below its own 200-day moving average. We’ve pointed out in the past how this can be an ominous sign, although most recently it gave a false signal, but this certainly bears watching.
Recommended Fast Options Trade: Zebra Technologies (NASDAQ: ZBRA)
ZBRA has broken above resistance at $41 and looks like it will continue moving higher if stocks can halt their current pullback. Here is the best way to play more strength in Zebra Technologies …
Buy the ZBRA Aug 45 Call 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 $44.60. That should give you an option price of about $2.30, for a 109% profit.
Close this position and cut losses if the stock closes below $40.10, when the option price should be about 70 cents. The stock is currently trading at $41.57. The computer-simulated probability of this option hitting its target price is 15%.
Find more option analysis and trading ideas at Options Trading Strategies.
Recommended Fast Options Trade: Cabela’s (NYSE: CAB)
CAB has fallen below support at $24.50 and should continue falling if stocks continue to weaken. Here is the best way to play more weakness in Cabela’s …
Buy the CAB Sep 20 Put up to $1 ($100 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 $21.10. That should give you an option price of about $1.70, for a 70% profit.
Close this position and cut losses if the stock closes above $25, when the option price should be about 70 cents. The stock is currently trading at $23.65. The computer-simulated probability of this option hitting its target price is 23%.
** 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: Cameco (NYSE: CCJ)
Close the CCJ Jun 25 Put. The position reached its three-week maximum 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.
