The Best Call and Put Options to Trade Now

We've been in a sideways market since Sept. 5, but it's felt more like a roller coaster with stocks climbing and falling daily. This has frustrated investors who are hoping stocks will climb higher or will fall into buying territory.

But it's a fantastic market for options traders. The daily volatility creates opportunities left and right, and we're going to show you how to capitalize on it with the best call and put options to trade right now.

You see, the upcoming election and the on-again, off-again stimulus talks are not helping to keep a lid on volatility. If you are a long-term investor, it's probably given you more than a few sleepless nights.

No doubt, you can't just throw a dart and pick a winning stock these days. And this is especially true now that the S&P 500 is bumping up against all-time highs. At these levels, most stocks are not obviously cheap.

But the volatility works both ways. The good news is that it makes for a great trading environment if you use options. Money Morning Quantitative Specialist Chris Johnson has two options trades for you today - both are bullish, but one uses call options and the other uses put options. They can both help you exploit this volatility and make some cash.

The Best Call Options to Buy Now for a 100% Profit

The bullish trade is with options on one of Chris' favorite sectors - alternative energy. As the election gets closer, more people will be looking into "going green," and that means the bullish pressures will stay on.

"One of the most popular trends in the shift away from fossil fuels is the electric vehicle," Chris told us. And after Tesla Inc. (NASDAQ: TSLA), arguably the king of the EV market, signed a massive sales deal with Piedmont Lithium Ltd. (NASDAQ: PLL), all eyes on Wall Street turned toward EV tech.

Lithium is a key component in electric car batteries. And with the deal in hand, Piedmont promptly quintupled, before settling back to a mere triple in three weeks' time. Tesla is smack in the middle of its own sharp growth trend, so demand for lithium can only grow with it.

But Piedmont is already richly valued. That's why Chris set his sights on another lithium producer that is much earlier in its growth path. Livent Corp. (NYSE: LTHM) not only produces the chemicals for car batteries, but it also is a provider to companies that make batteries that store solar energy in buildings.

The stock jumped up shortly after Piedmont's news, but that was only a 20% gain, not a four-fold gain, so there is still opportunity to be had here. Not only that - since reaching its highest close of $11.97 on Oct. 7, the stock has pulled back by about 8%. That's $1 in price to just under $11. Chris thinks Livent can reach $14 soon, but rather than just jumping in here, he thinks the stock's volatility can give you entry at $10.50, where he suggests a limit order to buy.

However, to really juice things up, he recommends buying the LTHM April 16, 2021 $10 call (LTHM210416C00010000) using a limit order of $2.

If the stock reaches $14 by December, you're looking at a gain of 100%.

And our put options trade could be even more lucrative...

The Best Put Options to Buy Now

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Now, our second trade isn't for everyone. But if you're considering buying at least 100 shares of Amazon, then this is how to get paid to do it...

For his second trade, Chris is looking to sell puts on Amazon right now.

No doubt, Amazon.com Inc. (NASDAQ: AMZN) is a force to be reckoned with, and it likely has a bright future ahead, even with all the posturing in Washington to "break up Big Tech." However, with all the hype leading up to Prime Day, the company's biggest selling event of the year, the stock seems to be a bit overheated.

Chris thinks it is in need of a pullback. Remember, Prime Day boosts sales in the short term, and that tends to push the stock up a bit too far. In fact, he studied the stock's performance around Prime Day and saw that it is a classic "buy the rumor, sell the news" event. In other words, the stock tends to pull back afterward.

Here's how this trade works.

Let's say you want to own Amazon but are not sure this is the best time to buy; ahead of a pullback, for example. What you can do is sell a put option with a strike price below the current stock price and wait for one of two possible good outcomes.

First, if the stock drops down to the strike price, the option will likely be executed, meaning you'll be buying 100 shares of Amazon. That's exactly what you wanted to happen. You wanted to buy the stock, and you picked the price you wanted to buy it at.

Alternatively, if the stock doesn't drop, you simply pocket the premium from selling the contract. That could be worth more than $10,000 right now.

Either way, you make money.

Here are the trade specifics:

Sell AMZN Nov. 20, 2020 $3,200 put. Just to be sure, 100 shares of Amazon at $3,200 is valued at $320,000.

With the stock at $3,338 this week, the put becomes in-the-money if the stock drops 4.1%. The sale of the put will bring in around $11,200.

Again, as you can tell from these numbers, this trade isn't for everyone. But if you're looking to make a big splash on Amazon stock, why not get paid to do it?

Of course, the cost of Amazon will price a lot of traders out of this play, but there are plenty more opportunities just like it. Find out how to do this regularly here...

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