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We'll Tell You When It's Time to Tap Tesla

A week ago today, in a strategy story aimed at helping you survive and thrive in today’s whipsaw markets, Chief Investment Strategist Keith Fitz-Gerald told us to put Tesla Motors Inc. (Nasdaq: TSLA) on our “watch lists” for a likely future purchase.

“BP, Tesla is a definite ‘shopping list’ stock,” Keith told me back then. “We’ve been nibbling at it here, and have played it successfully several times. But it’s not yet at the point where I’m ready to jump all the way in. I think my rationale behind Tesla remains upbeat. I mean, you’ve got a real winning combination here – a disruptive sales model, a CEO who’s the most innovative guy on the planet, all the capital in the world that can be brought to bear. I don’t give a rat’s [tail] that New Jersey won’t let the company sell its cars there. There are much bigger opportunities. Wait ’til you see what the company does with China.”

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    Options 101: How to Win Big on Toll Brothers (NYSE: TOL) with a Calendar Spread

    Last week, I explained how to profit from housing-sector stocks like Home Depot Inc. (NYSE: HD) using a modified option straddle.

    Today, we'll look at an alternative options strategy - known as a long-term calendar spread.

    This strategy is better suited to stable or trending stocks.

    It's particularly appropriate for companies, whose share prices aren't likely to make a major move until the housing recovery picks up more steam.

    In this case, I'm talking about a company like the Toll Brothers Inc. (NYSE: TOL).

    The key for using a calendar spread strategy on Toll Brothers is the prospect of a slow-appreciation scenario. That's likely, given the news in the housing market isn't always so rosy.

    For example, MSNBC reported on Saturday that, in spite of the lowest rates ever and home prices that are down by a third since 2006, mortgages now are much harder to get.

    That type of news is the primary reason you probably don't want to buy a stock like Toll Brothers right -especially since it's already up 74% off the October lows.

    However, that doesn't mean you can't profit from Toll Brothers using options to create a long-term calendar spread.

    How to Structure a Toll Brothers Calendar Spread

    Here's how it might be structured, based on prices available early this week:

    To continue reading, please click here...

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  • what is calendar spread