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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…