Buy Ryder Calls and Hypercom Puts

Stocks had another bumpy ride Friday to close out the week. Although not yet reflected in the charts, volatility certainly feels like it is increasing and it is becoming more important foroptions trading investors to stay alert. On the bright side the increasing volatility gave us some profits to take on a current position. Here are the details �

Recommended Fast Options Trade: Ryder System (NYSE: R)

R rallied sharply to $54 then pulled back. But it reversed course and broke above $54, setting it up to move higher if stocks can sustain a rally. Here is the best way to play more strength in Ryder �

Buy the R Aug 60 Call up to $1.30 ($130 per contract).

After taking the position, enter a good-til-cancelled contingent order to sell this option if the stock hits its target price of $59.10. That should give you an option price of about $2.80, for a 115% profit.

Close this position and cut losses if the stock closes below $53.10, when the option price should be about 80 cents. The stock is currently trading at $55.05. The computer-simulated probability of this option hitting its target price is 19%.

Recommended Fast Options Trade: Hypercom (NYSE: HYC)

HYC broke below a trading range and also its 50-day moving average. It bounced back slightly on Friday but looks like it will continue moving lower, especially if stocks continue to struggle. Here is the best way to play more weakness in Hypercom �

Buy the HYC Jul 10 Put up to $1 ($100 per contract).

After taking the position, enter a good-til-cancelled contingent order to sell this option if the stock hits its target price of $8.60. That should give you an option price of about $1.70, for a 70% profit.

Close this position and cut losses if the stock closes above $10.70, when the option price should be about 70 cents. The stock is currently trading at $9.95. The computer-simulated probability of this option hitting its target price is 21%.

** All of our short-term recommendations can be taken for up to three days after they are recommended. Make sure the stock and option prices are close to where they were when we made the recommendation. If after three days you still have not gotten the position filled, cancel the order and wait for our new recommendations, as the profit probabilities may no longer be valid.

Ken Trester is editor of the popular Maximum Options program. Trester has been trading options since the first exchanges opened in 1973 with a winning streak that goes back to 1984 with money-doubling average annual profits since 1990.