Even if you don't care much for politics, investors should pay attention to what is happening now ahead of the election. It's fueling our best options trade today.
Former U.S. Vice President Joe Biden's lead in the polls expanded after a rocky debate and U.S. President Donald Trump's COVID-19 diagnosis. While polls are to be taken with a grain of salt, they can give you a rough map of your trading strategy for next year.
Choosing which options to buy can be part of that strategy. And it's at least somewhat a function of who fills the oval office.
Under the assumption that the polls get it right this time around, smart investors look ahead for the stocks that should fare best. Aside from personality differences, the candidates' differences in policy are quite stark. From higher tax policy to fighting climate change, the Biden agenda should favor certain sectors and industries.
Before we show you the best options trading strategy in this scenario, here is just one of the changes or trends we expect to see in a "blue" victory. It is a big one.
Trade Options on Renewable Energy
For a start, investors will expect more government investment in "green" projects. Companies that build, develop, and use renewables should benefit.
Despite his reluctance to vigorously support it, the Green New Deal is part of the plan. That means a shift from fossil fuels to wind, solar, and hydro energy. This is a massive piece of potential legislation that seeks to overhaul all energy production to cut carbon emissions and shape the economy.
Must See: He lost everything and fled to Thailand. Two years later, he had $5 million to play with - all because of this one strategy.
The problem, which is not necessarily that bad, is that there are many ways to profit from a green future. Solar panels, electric cars, wind turbines, hydrogen powered engines, and batteries just scratch the surface of what is out there.
And that brings us to our best options trade today...
The Best Options Trade Now
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Money Morning Quantitative Specialist Chris Johnson recommended solar panel maker SunPower Corp. (NASDAQ: SPWR) just two weeks ago at a price just above $10 per share. This stock closed at $15.61 Tuesday for a gain of more than 50% and a testament to the juice that is available in this sector.
Today, Chris has another play in green energy, and it is one of the best options trades for a pending Biden presidency. It is also a broad brush on the sector, rather than picking just one stock.
The iShares Global Clean Energy ETF (NYSE: ICLN) tracks an index of global stock in the clean energy space. These include companies that produce energy from solar, wind, biofuels, and other renewable sources, as well as companies that produce the technology to do so.
Chris thinks it has upside potential for the long term as more green policies are put into place. In the shorter term, current skepticism in the sector - the wall of worry - could spark some "short squeezes at the individual level," which would be a sign that the entire sector is moving higher.
Now, ICLN has had quite a hot few days, scooting well past where Chris first liked it. That means it is a bit "overbought," having moved a bit too far too fast. Buying a dip here might be a better plan than paying too much for the stock and its options.
Here is Chris' original play:
Buy to open ICLN April 16, 2021 $18 calls (ICLN210416C00018000) with a limit order of $2.60.
Unfortunately, the call option closed Tuesday at $4, so it is rich right here. That means this is an option to put on your radar screen and wait for it to come down in price, although not necessarily all the way to $2.60.
A price closer to $3 should provide enough of a discount to current prices to give this trade a chance for big profits. Chris sees the stock rallying 25% over the next six months, and that means the option should make even bigger gains.
This Options Trading Strategy Delivers Instant Paydays - and More
Tom Gentile wants to show you how to use a certain options trading strategy that can help put money in your pocket fast.
Not only does this strategy let you collect an upfront payment right away... it can also help get you into stocks you want to own - and let you buy them at a major discount.
It's almost like getting paid to buy stocks.
Tom will walk you through this strategy step by step. When he's done, you could be on the path to building wealth faster than you ever thought possible.