Now is the best time to start adding puts to your portfolio.
The markets may have slid a bit yesterday off of worrisome coronavirus headlines, but the tides haven't shifted just yet from the recent optimism that's been driving stocks higher. But when they do, the bearish plays you snatched up now - just ahead of the curve - will come out on top and then some.
And right now, a sector of the market I'm expecting to lead the market lower in the next mass sell-off is defense...
But as I always say, for traders there's always an opportunity to profit, if you just know where to look. And as defense stocks continue their downward trend, I've pinpointed one stock primed for a put option trade.
This stock has been losing steam over the past few weeks, and technical indicators suggest this is only the beginning for this stock's downward spiral.
Most other market analysts have a positive short- to mid-term outlook for this stock, considering the rising geopolitical tensions overseas. As Russia continues to test U.S and Canadian borders in Alaskan intercontinental airspace, China arms itself for conflict in the South China Sea, and Saudi Arabia continues adding pressure to the ever-controversial oil market, many investors expect the defense sector to have a booming Q4 and beyond.
But they're forgetting two very important variables here, the first being the political climate...
We're coming into an election year where the previously big-ticket defense sector will likely take a back seat on all platforms across the political spectrum. Defense spending won't be winning any favors with the public this election season, in the wake of widespread civil unrest, leaving big defense stocks to flounder.
Second, we're taking earnings season into account...
Companies across the country are preparing to issue Q2 earnings reports, and the general consensus isn't promising - we're likely to see the full impact of COVID-19 on this second round of 2020 sales, and defense manufacturers are no exception to generally low expectations.
The stock we're trading today is scheduled to release earnings later this month, and we're likely to see this stock get torn apart by short sellers leading to the official statement, simply based on anticipated losses alone. Even if it does manage to pull off a miracle on earnings, investors are likely to remain skeptical.
For so many reasons, I think it's pretty clear why I'm recommending we go short on this stock today.
Check out the full trade details in this, my latest edition of "Fast Profits with Money Morning"...
Your Next Double Awaits...
Trade Details...
Action to take: Buy to open RTX Nov. 20, 2020 $60 put using a limit order of $6.25.
As Raytheon continues its trek lower to my $50 target, this put option could help you to double your money or more.
But this isn't your only shot at 100% gains, even in this uncertain market...
In fact, readers of my colleague D.R. Barton, Jr., did so four times in five days last month. Since the beginning of June, D.R.'s readers have had access to eight triple-digit winners - as high as 306%.
They do it by exposing some of the darkest, most mysterious corners of the market.
Here's how it works, and how the next payday could be yours...
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About the Author
Chris Johnson (“CJ”), a seasoned equity and options analyst with nearly 30 years of experience, is celebrated for his quantitative expertise in quantifying investors’ sentiment to navigate Wall Street with a deeply rooted technical and contrarian trading style.