Buy Alert: November 5, 2013

Buy Alert:  November 5, 2013

 

Trade Details

Buy Dominion Resources (D) December $65 Puts for $1.60 or better

 

Why?

For our next trade today, we’re going to look at puts.  More precisely, we’re buying puts on Dominion, an electric utility.

There’s actually nothing wrong with D, it’s a good company and just posted strong earnings.  However, the stock now appears to be overbought.  The shares are trading higher than the 20-day, 50-day, and 200-day moving average.  What’s more, D is a utility – typically used a defensive investment.  Investors are bound to rotate out of utilities in droves if the market keeps going higher.

Let’s grab puts on D.  We have until December for the stock to return to more reasonable levels – as investors cycle into more aggressive growth stocks.

 

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Category: OTW Buy Alerts