Market Outlook
Our indicators for options trading investors continue to give bullish to neutral readings, unchanged from last week. And also the same as last week, the major stock indexes remain in bullish trends but our internal indicators remain in more bearish modes. Primarily, the 200-day Moving Averages Index and Cumulative Volume Index are below their 50-day moving averages, and the 200-day Moving Averages Index has remained below its own 200-day moving average.
Recommended Fast Options Trade: Crown Holdings (NYSE: CCK)
CCK broke above a triple top at $39.50 and moved higher. It then created a bullish “flag formation” and now looks like it is going to break out above that. Here is the best way to play more strength in Crown Holdings …
Buy the CCK Jul 43 Call up to 70 cents ($70 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 $43.30. That should give you an option price of about $1.60, for a 128% profit.
Close this position and cut losses if the stock closes below $40.10, when the option price should be about 40 cents. The stock is currently trading at $41.19. The computer-simulated probability of this option hitting its target price is 18%.
Find more option analysis and trading ideas at Options Trading Strategies.
Recommended Fast Options Trade: Emerson Electric (NYSE: EMR)
EMR broke below its 200-day moving average and fell to $52.80 before snapping back. But it should continue moving lower if stocks fail to rally. Here is the best way to play more weakness in Emerson Electric …
Buy EMR Sep 50 Put up to $1.45 ($145 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 $50.70. That should give you an option price of about $2.80, for a 93% profit.
Close this position and cut losses if the stock closes above $56.60, when the option price should be about $1. The stock is currently trading at $54.61. 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.
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.
