The government and the Federal Reserve have created plenty of volatility for options traders to sink their teeth into. Whether you want to play the NASDAQ’s meteoric rise or the buzz redirected into recovery stocks, you may want to look into options trading strategies. As with any trading strategy, the most important aspect is to match the trade with your personality. If you don’t have the stomach to weather an earnings announcement, you don’t have to.
Here are the best options to buy this week for every trading blueprint.
1. 3M (NYSE: MMM)
The 3M Company is a leading manufacturer of retail products. It runs its business under 4 segments – safety and industrial, transportation and electronics, healthcare and consumer segments. 3M products range from industrial adhesive, tapes, electronic display materials, oral care products, skin care products and office supplies.
The retail stock has a market cap of $101 billion and an EPS of $8.53. It has a 52-week low of $114.04 and a 52-week high of $182.55. 3M has an annual dividend yield of $5.88 per share. It has high liquidity and trades more than 787,392 shares per day. 3M generated revenue of $32 billion in 2019.
2. Bets on Walmart (NYSE: WMT)
Companies like Walmart and Costco (NASDAQ: COST) tend to rise with uncertainty and level off during times of relatively low volatility. Both sides of Congress and the White House have agreed to extend all of the important stimulus benefits to the end of the year. This gives consumers the money they need to keep buying necessities and keeps investors from pulling out of the market based on perceived uncertainty.
If you believe that the government will follow through with the agreement, prepare your trade for sideways movement or a slight fall in this stock grouping. If you don’t own any shares, an iron condor that starts well out of the money will give you room to be wrong in 1 direction. If implied volatility seems to be going down during the week and the government is following through with its promises, you can roll those wings in to maximize your profit.
3. Baidu (NYSE: BIDU)
Baidu is a global leader in providing of internet search services. It operates business through 2 segments – Baidu Core and iQIYI. It offers a range of products including Baidu App, Baidu Feed, Haokan and Quanmin.
The internet service stock has a market cap of $78 billion and has an EPS of $12.83. It has a 52-week low of $82 and a 52-week high of $248.98. Baidu has high liquidity and trades more than 9.3 million shares per day. It generated revenue of $107 billion in 2019.
4. Zoom (NYSE: ZM)
Headquartered in San Jose, California, Zoom is a communications technology company. It helps businesses and organizations bring their teams together in a frictionless environment to get more done. Its product is a reliable cloud platform for video, voice, content sharing and chat. Zoom runs on mobile devices and desktops.
The tech stock has a market cap of $98 billion and has an EPS of $1.44. It has a 52-week low of $70.26 and a 52-week high of $588.84. Zoom has high liquidity and trades more than 1.3 million shares per day. It generated revenue of $330 million in 2019.
5. Progressive (NYSE: PGR)
Founded in 1937, The Progressive Corporation is a leading insurance provider in the U.S. It provides insurance for personal, commercial, auto and residential properties. The Progressive Corporation has over 18 million customers across the U.S.
The insurance stock has a market cap of $57 billion and an EPS of $8.63. It has a 52-week low of $62.18 and a 52-week high of $102.05. The Progressive Corporation has an annual dividend yield of $4.90 per share. It has high liquidity and trades more than 771,669 shares per day. It generated revenue of $38.9 billion in 2019.
Benzinga Options Newsletter
Whether you already know how to trade options or you are looking for ideas, the Benzinga options newsletter is a great resource for up to date strategies for today’s market. As the market changes, your strategies must change. Read the newsletter for a guide to help you navigate today’s once in a lifetime opportunities.
Best Option Strategy to Use this Week
It also seems as though cooler heads are prevailing when it comes to stopping the spread of COVID-19. Daily reported cases are down from July highs. Daily reported deaths are down 75% from April highs. Let’s hope they stay there.
Most options strategists are assuming a short term bottom in the market at our current levels. The Chicago Board Options Exchange (CBOE) put/call ratio now stands at 0.5, meaning the market is bullish on itself. If you want to speculate, smart money is moving slightly away from downside protection to capture more of the upside potential. Consider bull call spreads on stocks you like and perhaps even a synthetic long position in a recovery stock.
Best Options Brokers
Your options broker is just as important as your strategy — your broker helps to define your execution. Here are some of the reputable brokers you can depend on for industry-standard uptime, negligible latency and a powerful user interface.
Navigating Today’s Volatile Market
Regardless of your risk tolerance, take the time to understand the benefits and risks of trading options before getting in over your head. We are currently in 1 of the most unpredictable markets of the modern era. There is no shame in leaning on your paper trading options account to learn how you react to strategies in the real world and to build a personalized data set.
Should you choose to join the battlefield, make sure that you give yourself a set of unbreakable rules. Be honest about your trading personality and even more honest about your trading ability. Successful traders dedicate extraordinary amounts of time and resources to success in trading, so make sure you put in your time. That time is more important than any amount of money you could ever invest.
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