The Best Call and Put Options to Trade Now to Profit in 2021

The coming year is shaping up to be an explosive one for the stock market. Between vaccines and economic aid, pent-up demand is going to be unleashed like we haven't see in a long time.

That's especially good news for options traders. The potential movement in the stock market from this rally could make for some very profitable traders. And to help you uncover exactly how to play them, we're showing you the best call and put options to trade right now.

You see, we're already seeing signs of this optimism sweep through the market. Indexes hit record highs in the wake of vaccine news.

The same was true for economic aid from Washington. Just rumors of Congress even talking about a stimulus deal sent stocks higher, and more than one time.

Each time any of these announcements happen, the light at the end of the tunnel gets that much closer. With Americans saving more this year and paying down debt thanks to being stuck at home, there is going to be ample cash flowing into the economy next year. Jobs will return and businesses will see earnings grow.

Tom Gentile, Money Morning's options trading specialist, sees the S&P 500 hitting 4,250 or more in the next year. It closed at 3,687 on Dec. 22.

The best way to profit from the coming deluge is with well-timed options trades right now.

And you can do it with both call options and put trades.

Here's how...

The Best Call Option to Buy Right Now

With so many people working at home, there has been an exodus from the cities. Most people move to big cities to be closer to work and to take advantage of all the culture they have to offer. However, in 2020, there is no need to be close to the office, and culture, in the form of restaurants, museums and theaters, has all but shut down.

Real estate out of the cities is booming, and Tom thinks that homebuilder KB Home (NYSE: KBH) is poised to cash in. Housing starts and builder confidence remain high, and mortgage rates remain low - the perfect recipe for profits.

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And right now, KB is undervalued despite growing earnings at about 20% per year.

If you are looking for a shorter-term play, Tom likes the KB Jan. 15 $30 call. But if you think the housing boom has staying power, and with attitudes toward working at home probably changing for good, you can look at options expiring in the summer of 2021, or even long-term LEAPs, that expire in 2022 or 2023.

But you don't need to stop there.

You can find bullish opportunities with put options too...

The Top Put Trade to Make Before 2021

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The second stock is a play on the return of travel, and if you are like most people, you cannot wait to get out and go somewhere. Thor Industries Inc. (NYSE: THO) makes recreational vehicles (RVs) and owns some classic brands like Airstream and others. Even now, when resorts are out of the picture, people are still traveling with their families in these mobile hotel rooms, seeing the sights and enjoying the out of doors.

Now think about when Americans are free to visit not only outdoor parks but can travel from state to state to see new cities, visit with friends and spend some of that cash they've saved up to try the "local culture."

Tom likes the stock's reasonable price/earnings ratio and steady earnings and dividend growth. The strategy here is a little different in that we can sell a put option to be bullish in the stock. His short-term target is $105 a share from its current $102.

By selling the THO Jan. 15 2021 $100 put, you get to pay $100 for a stock that is likely to gain 5% in just a few weeks. And you collect some cash up front for the privilege. The money you get for selling the option goes right to your bottom line, either as pure profit if the stock does not move higher, or as a discount on buying the stock outright.

Both of these trades are ways to be bullish on the market when American spirit is finally unleashed. Who is not ready for that?

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