Successful options trading investors habitually anticipate all potential scenarios. Rather than becoming too engrained in one market view, they carefully watch for signals which warrant an adjustment to their trading approach. Take the current market conditions for example. Over the past month the S&P 500 Index Options (CBOE: SPX) has established a short-term downtrend which has undoubtedly caused a rise in the ranks of the bears. We also closed out the latter half of last week with a fifty point drop from 1350 to 1300. While continued deterioration in the market is likely, traders should be prepared for a strong bounce as well. In the event the market experiences a change in character it is wise to have a few bullish stocks on your radar.
In selecting potential candidates traders should consider focusing on those which have held up best in the face of the recent market liquidation. Halliburton (NYSE: HAL) is one such example. Despite the significant sell off in the SPX, HAL has been basing at its 52-week highs. Traders may consider entering bullish plays on HAL if it is able to sustain a breakout over $51.50.
Traders desiring to make a more aggressive bet could purchase the HAL July 49 Call.
Traders desiring to make a more conservative bet could purchase the HAL July 50-55 Call Spread. That is, buy the July 50 call while selling the July 55 call.
The next earnings release on HAL is currently scheduled for July 18th.
Source: MachTrader
At the time of this writing Tyler Craig had no positions on HAL.
Follow Tyler Craig on Twitter@TylersTrading.
