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Buy American Express Call Options

Written By Brian Hicks

Posted March 16, 2011

Let’s make this short.

American Express (AXP) could break out — and soon. 

That is, if the Fed doesn’t screw this up, too…

axp chart 031611

Pick up American Express.

Better yet, pick up the July 2011 44 call options on the stock as soon as you finish reading this.

By the end of this month, American Express could easily break out of its tightly wound coiled spring or consolidation pattern, held since the year began.

And that’s all because of the Fed.

You see, if the Fed gives the go-ahead, American Express could resume its stock repurchase program which would send the stock significantly higher.

And while you can always just buy the stock, your best chance for explosive returns is to buy the July 2011 44 call options… and wait for the Fed.

I think we could see upside to at least $50 if the Fed gives the go-ahead.

The Julys are the next month of options available after April. And you don’t want to own the Aprils right now because of time decay issues. The closer you are to expiration, the closer you are to losing a bigger chunk of your money.

We explain this even more in my Options Trading Coach service.

Now, say you bought the July 44 calls at $3 and change, and the underlying stock ran to $50… You could easily be looking at a 50% to 60% gain just on a consolidation pattern breakout, as you can see in the chart above.

For those of you who are reading this, looking at the chart, and scratching your heads, let’s break it down a bit further:

  • First, make sure you have an options account. This is very important. You can’t trade options without first being approved to trade options. I’ll wait…

  • Okay, good. You have your options account set up and are ready to make money. Once you receive the buy recommendation on the July 2011 44 calls, you want to make sense of it. The July 2011 44 mention includes the strike month and year, and the strike price. Our goal with the 44 is for the underlying stock to break above that price by the time the strike month of July hits.

  • While you can always exit this call before the strike month for gains, you must exit the play at or before the expiration date. (The third Friday of every month is options expiration. In this case, the third Friday of July 2011 would be your expiration date for these AXP call options).

  • To open the trade, you would Buy to Open this trade. To close it, you would Sell to Close. That’s it! You just receive the buy recommendation to buy or exit, and you follow it to a ‘T’.

Trust me, I’ve heard all the excuses for not trying options.

I’ve heard all the rumors, the excuses, the myths — and most are completely inaccurate.

I’m putting a free options report together to dispell investors’ fears of options and to explain more of the basics, so stay tuned for that.

Because trust me… If you want to make “real” money in this market, your best bet is to learn options.

Stay Ahead of the Herd,

Ian L. Cooper
Editor, Wealth Daily