You might think of put options as something to trade when markets are dropping, like they did in March. But the reality is there are opportunities to profit from weak stocks every day. In fact, some of the best put options to buy can be found in bull markets.
Just look at the major market indexes. The S&P 500 is near record highs, but a big swath of stocks on the NYSE and Nasdaq are still in bear markets, down at least 20% from their highs. And there are some leaky boats out there that are rising with the market's tide. Gains like those will be short-lived.
To find these opportunities, you just need to know where to look. That's where an expert like Money Morning Quantitative Specialist Chris Johnson comes in.
Chris's quantitative methodology helps him uncover weakness in stocks just as easily as he can uncover a future winner. And because traders are salivating over the potential to strike it big as stocks race above record highs, put options can trade for a bit of a discount. That maximizes your profit potential too.
Today we're going to show you one of these stocks. It just jumped in share price recently, but Chris says it's going to fall back down in a hurry.
It makes this our best put options trade right now, and it could double your money...
The Best Put Options to Buy Right Now
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Chip-maker Intel Corp. (NASDAQ: INTC) got smacked down with the rest of the market earlier this year and recovered with it through the summer. Bad news seemed to smack it back down every few months after that, but it still managed to rally back a bit on the back of the strong broad market.
Intel stock did it again this week as it jumped higher on news that activist investor Daniel Loeb, CEO of hedge fund Third Point, is pushing the company to make strategic changes. The problem is that each time the stock finds a little strength, it is able to rally for shorter and shorter lengths of time and with diminishing success. So far, that seems to be playing out again.
With both of its major moving averages - the 200-day and the 50-day - falling, Money Morning Quantitative Specialist Chris Johnson says it's a tell-tale sign the stock will be heading lower.
Despite being one of the original tech giants from an earlier era, and making products for a socially distanced world, conditions do not look at all healthy for the stock. Chris looks for it to drop below strong chart support near $45 a share and fall to $35 or lower. It closed Wednesday at $48.75, which means it is looking at a potential decline of 28% or more.
There is one more thing you should know about the $45-level on Intel stock. It served as support, or a place where the market thought its shares were cheap, on at least eight occasions over the past three years. A drop down below that price could set off a stampede of bears as investors simply give up on the company.
If and when that happens, Chris suggests that you can pocket 100% gains with put options. Here are the details: Buy to open INTC July 16, 2021 $50 put (INTC210716C00050000) using a limit order of $5.65.
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