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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.
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…