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Mother’s Day is a time to recognize mom’s hard work, dedication and love. At times, we all put our mom’s patience to the test. Occasionally, we would make a mess. Mom often came behind us to perform the clean up and make things right again.
We think mom would be most gratified on this Mother’s Day to know that we have learned from her example. So let’s take a look at some mom-inspired option trades and show her we really know how to clean up in the stock market.
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#1 Halliburton Co. (HAL)
By Nick Atkeson and Andrew Houghton
Halliburton Co. () is expected to earn more than $2.12 per share next year. The stock fell from over $35 per share to $30 on fears that its cementing work on the BP PLC () rig played a part in the oil spill, and is now down below $28 on the market sell-off. While the spill is a direct overhang to Halliburton, the stock is unlikely to show much appreciation. On the other hand, it may not show much more depreciation either, as many investors’ worst fears are already priced into the stock.
Time to clean up. We recommend selling the HAL Oct 25 Puts (). We believe the stock is unlikely to drop below $25 per share by October expiration. If we are right, your profits would be theoretically infinite, which is a major clean up, even in mom’s eyes.
Learn .
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#2 Tiffany & Co. (TIF)
By Sam Collins
For Mother’s Day you want to give mom something of value and class. And nothing says both more than a robin’s egg blue box bearing the famous name of Tiffany & Co (). Tiffany’s has been synonymous with fine jewelry since 1837.
The stock has pulled back from a high of $52.19 to just above support at its 200-day moving average at $42. S&P rates TIF a “four-star buy” with a 12-month price objective of $55. But with the stock close to major support, buying a call could give Mom a quick profit.
Buy the TIF Aug 43 Calls () for $4.70 or less with a trading target of $8.50 for a 50% profit by July 4.
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#3 Southwest Airlines (LUV)
By Chris Johnson and Jon Lewis
What better way to say Happy Mother’s Day than with some LUV. Southwest Airlines () has been a stellar and steady performer, 10% this year (yes, that includes the latest market leg down). The stock has pulled back of late, but is finding strength at its 100-day moving average, a trendline that has supported a few declines for the past several months.
LUV has stayed outside the merger swirl surrounding the airlines. Of course, LUV has always been an outsider of sorts. Managing to stay a discount carrier that doesn’t charge baggage fees is a notable achievement. And it turned a profit in the first quarter. A retreat in oil prices should help the bottom line in the second quarter.
Show some love for LUV with the LUV June 12 Calls () for around a dollar. This should give the stock plenty of time to bounce off the 100-day moving average and take out its April high around the $14 level.
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#4 Impax Laboratories (IPXL)
By Michael Shulman
When you reach a certain point in life, there are special gifts that can be given to the mother of your children. One of the most precious is a good night’s sleep. When men reach a certain age, many wake several times a night to use the bathroom due to a malady known as benign prostatic hyperplasia, or BPH. These men often disturb that special someone, who has already survived snoring and an unreasonable addiction to sports and Jack Bauer.
The answer for BPH is the drug Flomax, but there is a new generic from a little outfit called Impax Laboratories (). The company announced blockbuster earnings last week due to generic Flomax, and the stock has held well despite the market beating. IPXL calls are reasonably priced, and you should be able to play them for years.
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#5 McMoRan Exploration Co. (MMR)
By Nick Atkeson and Andrew Houghton
If you’re mom used to read you bedtime stories, perhaps you’re familiar with the character Davy Jones. Now that you’re grown, you’re probably more interested in profits than pirates, so we have a different kind of story for you. In January, McMoRan Exploration Co. () management announced a huge discovery called Davy Jones in the deep water of the Gulf that sent the stock up more than 100% from where it opened the year. Many analysts believe the stock is worth $20 based on their share of the Davy Jones prospect.
The stock has dropped from almost $19 per share to below $11. We believe it is time to take advantage of the sell-off with a , which involves purchasing call options at a specific strike price while also selling the same number of calls of the same expiration date but at a higher strike.
Buy the MMR Aug 12.50 Calls () and sell the MMR Aug 17.50 Calls (). We also recommend selling the MMR Aug 11 Puts () to further reduce the net cost of trade.
Learn more about .
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#6 Lennar Corp. (LEN)
By Sam Collins
Mom, home and apple pie are all very American, and owning a house is the goal of almost all American moms. The housing market is finally turning, and the nation’s homebuilders are finally in production again.
Lennar Corp. () is one of the largest homebuilders in the United States. After several rough years, Lennar will probably achieve a profit in the third quarter and could even register a profit for the year.
The stock has pulled back from its high of $21.79 and is now under $18. Standard & Poor’s has given the stock its highest rating, a “five-star strong buy” with a 12-month target of $25.
Buy the LEN Aug 18 Calls () for $2.21 or less with a trading target of $4.50 for a profit of more than 50% by June 1..
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#7 Dress Barn (DBRN)
By Chris Johnson and Jon Lewis
With a presence in 48 states and the District of Columbia, most moms have shopped at a Dress Barn (). Investors may want to take a look as well. The stock is up around 115% from its July bottom, compared to around 35% for the S&P 500 (). The stock has pulled back along with the broader market, but is finding strength at its 50-day moving average.
DBRN reports earnings later this month. The Street expects a modest profit increase of just 12% from a year ago. The company has beaten the past four estimates by an average of around 20%, and the shares have gained an average of around 4% in the week following each of these reports.
Another thing moms should like about DBRN, besides shopping there, is the high short interest. With 12% of the float sold short, the stock could be helped by a should earnings impress the Street.
Take advantage of the upcoming earnings report by buying the DBRN June 25 Calls () for around $4.
Get .
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#8 Apple (AAPL)
By Michael Shulman
In the technology age, the mother of the house ain’t what she used to be. The mom in my house is threatening me with life and limb if I do not upgrade our satellite system to HD and flat panels, and she was the first to get an Apple () iPhone and loves her apps.
AAPL sold off a bit before the market crash because some moron in Washington decided to use the words “antitrust” and “Apple” in the same sentence. But the sell-off has created a great buying opportunity.
AAPL will continue to suffer with the market, but the company is firing on all cylinders. Look at some longer-term out-of-the-money AAPL calls.
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