Ken Trester’s Fast Options
A strategy idea for options trading investors.
Recommended Fast Options Trade: Ryder System (NYSE: R)
R broke above resistance at about $55 and moved sharply higher. It has pulled back slightly but should continue moving higher if stocks can continue to rally. Here is the best way to play more strength in Ryder System …
Buy the R Nov 62.5 Call up to $1.60 ($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 $60.70. 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 $54.60, when the option price should be about $1. The stock is currently trading at $56.72. The computer-simulated probability of this option hitting its target price is 18%.
Recommended Fast Options Trade: Trina Solar (NYSE: TSL)
TSL has been in a sharp downtrend and recently fell below support at $19. Solar stocks have been weak with government subsidies being cut, and more spending cuts will lead to further weakness. Here is the best way to play more weakness in Trina Solar …
Buy TSL Sep 15 Put up to 85 cents ($85 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 $15.30. That should give you an option price of about $1.70, for a 100% profit.
Close this position and cut losses if the stock closes above $19.70, when the option price should be about 50 cents. The stock is currently trading at $18.15. The computer-simulated probability of this option hitting its target price is 25%.
** 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: Coventry Health Care (NYSE: CVH)
Close the CVH Aug 37 Call. The position reached its three-week maximum holding period Thursday 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.
