Investors are excited about the economy being reopened and stocks keep running higher, but you can make even more money by using options trades to juice your gains.
That's especially true for stocks that will jump the most as Americans head back out and start spending money again. We've already shown our readers how to play the reopening for nearly 300% gains with another simple options trade.
And we're doing it again.
The best Robinhood options trade today is a play on a stock that stands to grow even faster as the economy reopens.
But it's not as simple as choosing a business you think will do well and buying any option. That's where many new options traders find trouble.
It's important to examine the technicals of the stock, plus the price, liquidity, and time decay of the options.
That's where we come in. Our experts are here to help you find the best options trades.
Money Morning Quantitative Specialist Chris Johnson has been watching the fundamentals closely. And he just uncovered the best options to buy for a quick gain in June 2020.
We're also getting some help from rising volatility too, even as stocks rise.
Although the broad stock market remains firm, the underlying themes of a decimated economy, potential trade wars, and now social unrest are keeping volatility quite high. The CBOE Volatility Index (VIX) - also known as the "Fear Index" - closed Monday at 28.23. That's literally double where it was on Feb. 19, the day the S&P 500 made its all-time high before the pandemic.
What that means is that traders still expect higher-than-normal volatility to rule the markets for at least the next few months. Fortunately, higher volatility makes our options more and more likely to jump into profitable territory.
That gives the trade we're about to show you a double catalyst of economic optimism and rising volatility.
And the beauty of simple options trades like this one is they can be done right on free trading platforms like Robinhood or WeBull.
Here's how to turn the reopening into triple-digit profits with this easy-to-do options trade.
The Best Options Trade on Robinhood Today
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Chris is bullish on Dicks Sporting Goods Inc. (NYSE: DKS) due to its increasing traffic post-lockdown and increased capabilities away from traditional in-store operations.
The company missed its earnings estimates when it reported its results on Tuesday (June 5); however, the stock still jumped higher. Traders were not fazed by its higher expenses incurred during the pandemic and believed that getting them out of the way now opened the door for higher earnings later as business expands post-pandemic.
One other reason for the initial firmness was that consumers are focusing more on wellness, activity, and getting outside; all within Dicks' wheelhouse. Aside from these knee-jerk reactions, the intermediate-term trend is solid to the upside.
Plus, on the technical side, the rising trend from the March low remains very-much intact.
After closing Monday at $36.46, Chris thinks the stock is primed to get its post-earnings legs back and punch through its 200-day moving average, now at $37.17. The stock has been hovering just below this level for several days, which makes any move above the average that much more reliable. After all, if a stock does not experience increased selling when it reaches a technical ceiling - especially after weak earnings news - it means investors are not so willing to let go of their shares. Low supply of shares for sale is bullish as any good news will find buyers fighting for the limited shares available to buy.
Chris has a $40 short-term price target on the stock, which is only 9.7% away. In this volatile environment, that is not that far at all. And a gain like that in just a few weeks is pretty good.
But we can do better.
Buying call options can beef up returns and actually cut down on risk. You would have to put up $3,646 to buy 100 shares at yesterday's close. However, you can control the same 100 shares with a call option.
For example, the July 17, 2020 $37 call option is less than $3.25, or $325 per contract for 100 shares of DKS.
Your risk is just the price you paid for the option, and not the full cost of the stock. And if Dicks stock reaches Chris' target in June, your returns could be in triple digits, just like our past trades. Our trade on Lowe's mentioned above is up 283% right now.
With high volatility, the best strategy is to risk less on any one trade. However, options can leverage that small investment into a very large return in very little time.
And if you want more opportunities like this one, Chris has an exclusive invitation for Money Morning readers.
Learn how you could capture 52% gains, 78% gains, and even 108% gains in a matter of days, right here.