An options trading idea from Ken Trester.
Recommended Fast Options Trade: Abercrombie & Fitch (NYSE: ANF)
ANF has fallen below its 50-day moving average support and could fall to $55 before finding new support. Here is the best way to play more weakness in Abercrombie & Fitch …
Buy the ANF Aug 60 Put up to $2.20 ($220 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 $59.40. That should give you an option price of about $4.80, for a 118% profit.
Close this position and cut losses if the stock closes above $70.20, when the option price should be about $1.40. The stock is currently trading at $66.64. The computer-simulated probability of this option hitting its target price is 21%.
Find more option analysis and trading ideas at Options Trading Strategies.
Recommended Fast Options Trade: Endo Pharmaceuticals (NASDAQ: ENDP)
ENDP has also fallen below its 50-day moving average and could fall to $34 before finding significant new support. Here is the best way to play more weakness in Endo Pharmaceuticals …
Buy the ENDP Oct 35 Put up to $1.50 ($150 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 $35.20. That should give you an option price of about $2.80, for an 86% profit.
Close this position and cut losses if the stock closes above $40.60, when the option price should be about $1.10. The stock is currently trading at $38.79. The computer-simulated probability of this option hitting its target price is 16%.
** 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: Emerson Electric (NYSE: EMR)
Continue to hold the EMR Sep 50 Put. The position reached its three-week maximum holding period Thursday with a 31% gain, but the stock remains in a downtrend and this option has three months before it expires, so there is still plenty of time for the stock to hit its target price and produce a bigger profit. Lower the stop price for this position to $52.70.
Profits Taken on Current Position: Elan Corp. (NYSE: ELN)
ELN hit its target price Thursday and the ELN Jul 9 Call was closed for a 62% profit. Sell-to-close your position now and take all of your profits if you have not already done so.
Action Taken on Current Position: Market Vectors Gold Miners ETF (NYSE: GDX)
The GDX was closed Wednesday when the stock traded below its stop 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.
