Ken Trester’s Fast Options
Recommended Fast Options Trade: Brocade Communications (NASDAQ: BRCD)
BRCD broke above resistance at about $6.70 and moved higher as a result of being “in play” as a possible takeover target. The stock could move higher still depending on a rumored sale price. Here is the best way to play more strength in Brocade Communications …
Buy the BRCD Oct 8 Call up to 60 cents ($60 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 $8.00. That should give you an option price of about $1.00, for a 66% profit.
Close this position and cut losses if the stock closes below $6.70, when the option price should be about 40 cents. The stock is currently trading at $7.11. The computer-simulated probability of this option hitting its target price is 26%.
Find more option analysis and trading ideas at Options Trading Strategies.
Recommended Fast Options Trade: J.C. Penney (NYSE: JCP)
JCP has fallen below its 200-day moving average support and looks like it will move lower if retail stocks continue to weaken. Here is the best way to play more weakness in J C Penney …
Buy the JCP Aug 30 Put up to $1.20 ($120 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 $29.80. That should give you an option price of about $2.40, for a 100% profit.
Close this position and cut losses if the stock closes above $34.80, when the option price should be about 80 cents. The stock is currently trading at $33.07. The computer-simulated probability of this option hitting its target price is 21%.
** 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: Hypercom (NYSE: HYC)
Sell-to-close the HYC Jul 10 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.
