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Today I’m recommending a bullish trade in Cemex SAB de CV (ADR) (NYSE:CX). While plenty of companies that stand to benefit from hurricane reconstruction got bid up before the storms, Cemex hasn’t made any big move yet, and I think that kind of stock will go up in value because its products will be needed in the future. There’s a huge amount of rebuilding needed in both Texas and Florida, as well as the Caribbean — so a cement company looked like a strong bullish bet:
Sell to open the CX Jan. 19th $8 put at about $0.30.
Note: There are several January expirations available for CX options. Be sure you are opening the monthly options that expire on Friday, Jan. 19, 2018.
For those who might be unfamiliar with naked put writes, this is a bullish position in which you expect the price of the underlying stock to increase. One thing to watch for is that if you are holding the option at expiration and the stock is trading below the $8 strike price, you will be put the shares. But as long as CX shares remain above $8 through expiration, we’ll ultimately walk away with full profits.
This is a longer term trade, and I felt comfortable doing that because CX isn’t very volatile — it’s a very quiet stock, doesn’t move much — and has a lot of technical support at $8. When I can write puts with a strike at a support level, that’s an ideal play.
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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.