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With all the enthusiasm over a new vaccine, money is flooding back into stocks, but investors and traders alike are leaving profits on the table if they aren't trading call options on the right stocks.
Just look what happened in the market last week. Pfizer Inc. (NYSE: PFE), which has a 90% effective vaccine in the final stages of testing, announced that it was, in fact, 95% effective. That news bookended other news that Moderna Inc.'s (NASDAQ: MRNA) vaccine was 94.5% effective in trials.
That's poured gasoline on an already hot stock market. But just buying any old stock and hanging on for the ride isn't a profitable strategy.
Not in this market.
While the Dow Jones hit its all-time high last week, tech stocks have struggled. A vaccine means work-from-home darlings like Zoom Communications Inc. (NASDAQ: ZM) will see less demand. At the same time, the economy is yet to recover from the pandemic.
That's why you need to do your research on which stocks are going to ride the market higher and which aren't. That's where we come in.
While there is money to be made with Pfizer, Money Morning's options trading specialist, Tom Gentile, says there is even a better play. In fact, of the stocks with the highest potential right now, none of them make vaccines, or therapeutics, or healthcare of any kind.
You see, the pandemic crushed industries that relied on people showing up in groups. These were companies that had their businesses partially or fully shut down as governments instituted lockdown and distancing orders. And they are going to bounce the highest and the fastest once a vaccine arrives.
Since we don't know the exact date a vaccine will be widely distributed, there will be some turbulence in the meantime.
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As we know, however, the "widely distributed" part of the equation is going to take time. Once vaccines are approved, they must be manufactured and distributed. While these are already in the planning stages, with over 300 million people in this country, it will take time to accomplish.
That's why using options trades can give you the upside with the smallest amount of risk.
Instead of holding these stocks in your portfolio and hanging on tight for the ride, you can buy a call option that gives you an amplified upside, and all you risk is the premium to pay for the options. You aren't stuck holding the stock if a vaccine takes longer to roll out than expected or if something happens to the company before the vaccine is ready.
It is critically important to know which companies will survive and then lead the return to the normalcy that a widely distributed, effective vaccine will provide.
And Tom's research has uncovered four stocks ripe for a call options trade right now…