Here’s a different option trading strategy we haven’t discussed. Pick a large established company that is doing and has been doing well for quite a while. One with slow steady growth. Now purchase a call option on it. Pretty simple really.
There are some companies out there that are slow, steady and consistent. Some may not offer much opportunity for growth right now compared to other companies coming off lows and preparing to rebound, but these slow steady bullish companies may offer opportunity through using options short term to trade. Procter & Gamble (PG) is one of these companies.
The Procter & Gamble Company provides consumer packaged goods in the United States and internationally. The company offers beauty products, such as cosmetics, female antiperspirant and deodorant, female personal cleansing, female shave care, hair care, hair color, hair styling, pharmacy channel, prestige products, salon professional, and skin care products under the Head & Shoulders, Olay, Pantene, and Well a brands; and grooming products, including electronic hair removal devices, home small appliances, male blades and razors, and male personal care products under the Braun, Fusion, Gillette, and Mach3 brands.
Procter & Gamble is a stall worth of a company. It has been inching its way up since January of 2010. The year before was tumultuous. Investors in 2009 experienced a huge 33% and then a rebound of about 28% before the year ended. Since then, PG has been creeping forward. In a peak and valley manner and almost unnoticed, it has managed to stretch from 58.45 to 65.8 over that two year period.
Now for those who are looking at PG as an investment, the steady bullish movement may look appealing, but from a long term perspective we believe there may be better ways to make money through other companies. The reason for this is that. PG is slowly coming up to its 2009 highs of 67.5. It doesn’t have far to go before it gets there. It may take awhile but opportunity for growth in other companies look more inviting. Once PG reaches that 67.5 level, it will be a challenge to see if it can push through. Analysts have PG set at a median price target of 72 so it might push through.
If one is to invest in PG presently we would suggest it solely for dividend reasons. There are better opportunities for growth stock out there. But-we do believe PG, in its present steady and predictable pattern offers investors wonderful opportunity for options plays.
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Making Money off Procter & Gamble with Options
As this steady pace, we like the opportunity of buying options straight up and as they increase in value, look for a resale. But, we suggest using the Bollinger Bands as points of buying options. PG has steadily moved from top to bottom in the bands. A good trader can play PG both ways. PG is just about to hit the lower band. When it does, at about 65, look at investing in the February or April 67.5 call options-depending on how fast you believe PG will rebound off the lower band.. Each will increase in value and as it closes in on this position, the call option will be ripe for resale and a nice profit.
PG is very steady and consistent and is poised for a good investor to use options to make good money.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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