Dow Jones soars above 23,000. Is it too stretched? >>> READ MORE

Trade of the Day: eBay Inc (NASDAQ:EBAY)

This cheap option sets us up to profit from the continued rally


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Our indicators are giving bullish readings again this week, an upgrade from last week’s neutral readings, and I still think that the current rally will continue through at least the end of the year. The bulls have been trying to push the Dow towards the psychologically important 20,000 level this week and, while they haven’t yet achieved that goal, I believe that level will eventually be taken out.

One thing about the strong rally we’ve been seeing since the election, which I’ve noted as well during past rallies, is that it doesn’t really give you a good chance to get in. In other words, the market is not pulling back as we might normally expect, so buyers are being forced to enter at higher and higher prices. For that reason, I think the Dow will probably inch up to the 20,000 level in the near term.

Luckily, as an options trader, you can always find cheap, underpriced calls, even when stocks are getting expensive overall. Today, I’m recommending one such trade on eBay Inc (NASDAQ:EBAY) that will let us profit while the market is in rally mode.

Buy to open the EBAY Feb (2017) 30 Calls (EBAY170217C00030000) at $1.15 or lower.

Note: The U.S. markets and InvestorPlace Media offices are closed on Monday for the Christmas holiday. We’ll be back with your next Trade of the Day on Tuesday, Dec. 27.

InvestorPlace advisor Ken Trester brings you Power Options Weekly, which delivers 5 new options trades and his latest trading advice to you each Friday. It’s the perfect ‘bridge’ between investing in ordinary stocks and the turbocharged world of options trading.

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. Try Power Options Weekly today and receive 2 weeks for the price of 1 for only $19.95.

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