Originally posted by R.Cox. For the full trading briefing click here
Here we will look to balance risk by recommending one Fiscal Cliff related trade and one with less exposure to the final outcome of that story. Last week’s Gold
trade finished out of the money as markets waited until the end of the week to react to a negative result. The rationale behind that trade is still intact and we will look to get in again at these cheaper levels with one week CALL options at 1650
. Downside risk is around $25, upside target price roughly $70 higher. Risk for the trade comes with a positive Fiscal Cliff outcome.
Next, we look at transportation companies likely to benefit from improved retail sales and online shopping. JB Hunt Transport Services (JBHT)
is one of the most well positioned companies with its improved earnings and recent dividend increases. Look to buy CALLS at current levels (58$) with one month expiries
. The longer time frame in this trade will help to shield it from some of the volatility stocks might experience into the end of the year.