The Best Call Options Trades for 290% Profit Potential

A COVID-19 vaccine is on the way, and it's made the stock market a trader's paradise overnight. We want to show you how to turn the vaccine rally with the best call options trades you can make today.

Pfizer Inc. (NYSE: PFE) rocked the world on Nov. 8, when it announced, with its partner BioNTech SE (NASDAQ: BNTX), that its coronavirus vaccine was 90% effective. The stock market went wild the next day, and the Dow rocketed higher by over 1600 points in the early going.

Considering the monster gain the market had just the week prior, it was no surprise that the Dow settled back to close with "only" a net gain of about 830 points, or 3%. Higher-risk small stocks did even better. Not surprisingly, stocks catering to the stay-at-home situation fell back.

Finally, there was a crack of light at the end of the pandemic tunnel.

In other words, this was a big deal. And such big deals can make traders a lot of money if they know what to buy and, more importantly, when to buy it.

The problem with such a news event is that everybody knows it. That drives up the prices of the stocks we want to own, so it is crucial to know how to deal with it. We can't jump in with wheelbarrows full of cash and expect to profit.

We have to be strategic. That's why we turn to options trades. By using options, we can lower our up-front costs, choose our target prices, and maximize our upside.

Money Morning's options trading specialist, Tom Gentile, has two strategies that can reduce up-front costs while still maximizing profit potential.

That's extremely important right now too. Just because a vaccine is on the way doesn't mean it will be here soon. Even with fast tracking and Emergency Use Authorization (EUA) at the U.S. Food and Drug Administration (FDA), full approval is likely a few months away. Then there has to be manufacturing, distribution, and most likely, a nice waiting period for an appointment to take it.

That means there will still be some ups and downs in the meantime. So overpaying for a stock right now could backfire.

The good news is that we won't have to wait that long to cash in on one of the greatest stories in our lifetimes.

Tom has a much shorter time horizon in mind, and it still will put you on the winning end of some extremely bullish trends.

In fact, he thinks that one of these trades can return as much as 290% by the middle of December.

Here's how to trade it...

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The Best Call Options to Buy Right Now

Tom's trade is targeting Pfizer itself. And if you think the stock has already popped, just wait for what comes next.

First, the company has said it's "weeks" away from sending the phase 3 trial data up to the FDA for an EUA ruling. And second, there is a chance that it will overcome a logistics problem requiring that the vaccine be stored at very low temperatures until ready to administer.

Because Tom expects a quick move, we can reduce costs with an out-of-the-money call option. That means it has a strike price above the current price of Pfizer stock. It costs less, but it requires that quick move to make money.

The stock is trading at around $39 right now, so, since we are bullish, we want to look at strikes in the $45 neighborhood.

PFE Dec. 18, 2020 $40 calls were trading for $1.29 Wednesday morning, or $129 for 100 contracts. You might even be able to pick them up cheaper now that Pfizer stock has pulled back a bit after Monday's euphoria.

If the stock trades up to $45 by the time the options expire on Dec. 18, the options should be worth around $5 a piece, of $500 per contract. That's about a 290% gain.

For an even safer way to play, we can use an option spread trade. That means buying a lower-strike call and simultaneously selling a slightly higher-strike call. The money we get from selling the higher call partially offsets the cost of buying the lower-strike call. Lower start cost means lower risk. We have to give up some profit potential to get that, but since this trade is only a month long, it won't be much.

Buy the PFE Dec. 18 $40 calls for $1.29.

Sell the PFE Dec. 18, 2020 $43 calls and collect $0.55 each, or $55 in premium, to make your net cost $0.74, or $74 per contract.

Don't forget, the faster Pfizer moves higher, the faster your profits come in. You can always sell ahead of expiration to lock in your gain.

He Made Millions Trading for an Hour Before Breakfast

Andrew Keene was living with his parents. Two years later, he had $5 million to play with - all because of this one strategy.

The crazy thing is you can do it in less than 90 minutes a week.

To see how easy your life could be, click here.

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