The market has finally shown some bullishness and has gotten past some resistance that has held it down for the last few months. Now is the time to search for stocks that are in strong sectors.
One such name is Halliburton Co. (NYSE:HAL), which provides products and services to the energy industry for the exploration and production of oil and natural gas worldwide.
Recently, this stock sector has been on a tear up. The stock has been trading significantly below most analysts� estimates, and it may be the right time for this stock to head even higher.
Technically, on Thursday the stock gapped above a resistance, and now a support, area of around $38. That area should be able to support the stock, and a break of $40 would confirm that the bullish run is still in place.
With HAL trading here at $39.13, you can�buy the HAL Dec 40 Calls for $2.20 or less.
With long calls, the trade profits when the stock rises, and the call premium increases as the HAL option moves more and more into-the-money. Maximum profit is unlimited because HAL can continue to rise and the maximum loss is $2.20 if HAL finishes below $40 at December expiration.
A practical short-term target for HAL would be around $45, which is where the 200-day moving average currently resides. The December calls were chosen to give this trade idea some additional time to profit. But if the stock drops below another support area around $36, consider exiting the position.
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