Nimble traders could take advantage of this market turmoil. Focus on your favorite high-flying stocks that you've always wanted an entry point in. Currently stocks look poised to drop again tomorrow but I wouldn't be surprised to see an oversold bounce begin before the closing bell.
NEW DIRECTIONAL CALL PLAYS
U.S. Oil Fund - USO - close: 31.51 change: -2.44
Stop Loss: n/a
Target(s): $37.50, 40.00
Current Option Gain/Loss: + 0.0%
Time Frame: 2 to 3 months
New Positions: Yes, see below
Why We Like It:
The sell-off in oil, like most everything else, is extremely overdone. There is no fundamental reason for the sharp plunge over the past two weeks. Bears would argue that the apparent slow down in the U.S. and global economies will mean less demand for oil. I could see how that might be true in the U.S. but overseas demand continues to ramp up.
This is another lottery-ticket style of play. We are not listing a stop loss. The plan is to buy November calls on the USO tomorrow morning at the open. Nimble traders may want to wait and see if there is a dip toward $30.00 and open positions near $30.00 instead.
We plan on holding this trade for several weeks.
- Buy Calls @ the Open Tomorrow -
- Suggested Positions -
buy the NOV $34 call (USO1119K34) current ask $1.87
Entry on August 9 at $ xx.xx
Earnings Date --/--/--
Average Daily Volume = 10.7 million
Listed on August 8, 2011