Jim Cramer’s acronym for the hot places to invest is BRIC ME. This stands for Brazil, Russia, India, China and the Middle East. But, in his usual hyper kinetic reasoning, he often clarifies this by saying the Rest of the World really includes nearly every country but Japan and the United States.
Audio Podcast:
An audio podcast of this article is available at: poweropt.com/podcasts/2007_05_23_Cramer.mp3
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Cramer’s central thesis is the US Federal Reserve, by limiting inflation is preventing adequate growth for companies domestically. “What happens,” Cramer said in an online interview, “is that companies, by their own admissions, have said that this is a no growth country and what we have to do is move everything, DOW chemical (DOW) has done this, to where the oil is; the Middle East because they can grow business there. We are in a peculiar moment where if you have an international business you’re doing well, and that’s why 50% of the S&P 500 is doing business overseas.”
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The pundit has a fairly negative view of the policy positions of the current Fed Chairman, Ben Bernanke, “I have pretty much given up on Uncle Ben, because he does not understand that the economy is divided… There are companies that are domestic only and there are companies that have decided, like I have, that the Federal Reserve cannot be trusted and that we have a policy in this country of tolerating no inflation. Not tolerating a little excess growth and some inflation. The rest of the world stocks are not hostage to the FED – When it doesn’t go well, as it hasn’t for the last couple of months, these stocks don’t sell off – everything else does.”
Cramer goes on saying, “Clorox (CLX) is moving into places like Ecuador. That is really recognition once again (of this theory). Ecuador is better than San Francisco.” Cramer also touts Foster Wheeler (FWLT) in the video cast saying it combines overseas investments and machinery – two things Cramer loves. “Whenever you hear of a clean coal plant, it’s Foster Wheeler. If nuclear were ever to kick in, it would be gigantic.”
Although, Cramer admits there are domestic companies bucking what he perceives as a trend, “There are periodically companies that break the rules: Black and Decker, Whirlpool, and American Standard.”
This PowerOptions blog entry is an example of how the average investor can identify the most attractive option trade based on their view of whether a stock will rise or fall. In this instance we will assume Jim Cramer is correct and look at DOW Chemical, Clorox, and Foster Wheeler.
However, whatever your personal opinion about the movement of an individual stock, PowerOptions can help you identify the most attractive trade. For example, If an your view is bullish, you might choose to use a covered call investment strategy, bull call debit spreads or bull-put credit spreads to make money off your hunch. Conversely, if you believe a stock will fall, you might choose bear put debit spreads or bear-call credit spreads.
Potential Trades:
All of the following option trades have 60 days until expiration. These trades were discovered using the powerful suite of option search tools found at PowerOptions.
| PowerOptions Covered Call Based on Cramer’s Rest of World (60 days) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock Sym |
Stock Price |
OPTION | Strike Info |
Opt Bid |
% Dnsd. Prot. |
% If Unch. |
% If Asgnd |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| DOW | $ 45.77 | DOWGI | 07 JUL $45.00 | $1.90 | 4.20% | 2.60% | 2.60% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| CLX | $ 67.07 | CLXGN | 07 JUL $70.00 | $1.10 | 1.60% | 1.70% | 6.10% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FWLT | $ 97.41 | UFBGT | 07 JUL $100.00 | $5.20 | 5.30% | 5.60% | 8.40% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DOW
DOW – DOW Chemical. This trade involves the July $45 call option and offers 4.2% downside protection and 2.6% potential profit if the stock is above the $45.00 strike price at the end of the option period. The stock is currently trading at $45.77.
Competitors for DOW include: BASF AG (BF), EI DuPont de Nemours & Co. (DD), ExxonMobil Chemical Company (private), Bayer AG (BAY), Eastman Chemical Co. (EMN), FMC Corp. (FMC), Georgia Gulf Corp. (GGC), Hercules Inc. (HPC), Huntsman Corp. (HUN), Lyondell Chemical Co. (LYO), NOVA Chemicals Corp. (NCX), Rohm and Haas Co. (ROH), and Westlake Chemical Corp. (WLK).
CLX
CLX – The Clorox Company. This trade involves the July $70.00 call option and offers 1.6% downside protection and 6.1% potential profit if the stock is above the $70.00 strike price at the end of the option period. The stock is currently trading at $67.07.
Competitors for CLX include: Colgate-Palmolive Co. (CL), Procter & Gamble Co. (PG), S.C. Johnson & Son, Inc. (private), and Prestige Brand Holdings Inc. (PBH).
FWLT
FWLT – Foster Wheeler Inc. This trade involves the July $100.00 call option and offers 5.3% downside protection and 8.4% potential profit if the stock is above the $100 strike price at the end of the option period. The stock is currently trading at $97.41.
Competitors for FWLT include: Fluor Corp. (FLR), Fuel Tech NV (FTEK), and Jacobs Engineering Group Inc. (JEC).
For more information about how to identify and research great option trades, visit the PowerOptions website. There you will find the data you need to make quick, clear, and informed decisions. You can trade knowing you have found the best investment. Also, PowerOptions will allow you, with a few quick clicks, to quickly and accurately compare trades. PowerOptions‘ premium customer support is second to none in the industry. They can be easily contacted when you need them at their toll-free number to answer customer questions. Call them now toll free at 877-992-7971.
PowerOptions provides a free 14-day trial of its service. So join PowerOptions today, and you too can start reaping the benefits of the covered call investment strategy.
PowerOptions‘ sister company PowerOptionsApplied provides expert stock option trading recommendations. PowerOptionsApplied specializes in covered calls, naked puts and iron condor stock options strategy recommendations. PowerOptionsApplied provides a 30-day risk free trial of its service.
[tags] Jim Cramer, Brazil, Russia, India, China, Middle East, Japan, United States, Federal Reserve, S&P 500, Ben Bernanke, Ecuador, San Francisco, ExxonMobil Chemical Company, S.C. Johnson & Son, Inc., BAY, Bayer AG, CL, Colgate-Palmolive Co., CLX, Clorox Co., DD, du Pont (E.I.) de Nemours & Co., DOW, Dow Chemical Co., EMN, Eastman Chemical Co., FLR, Fluor Corp., FMC, FMC Corp., FTEK, Fuel Tech NV, FWLT, Foster Wheeler Ltd., GGC, Georgia Gulf Corp., HPC, Hercules Inc., HUN, Huntsman Corp., JEC, Jacobs Engineering Group Inc., LYO, Lyondell Chemical Co., NCX, NOVA Chemicals Corp., PBH, Prestige Brand Holdings Inc., PG, Procter & Gamble Co., ROH, Rohm and Haas Co., WLK, Westlake Chemical Corp., bear put debit spreads, bear-call credit spreads, bull call debit spreads, bull-put credit spreads, covered call investment strategy, investment strategy, iron condor, poweroptions, stock option trading, stock options [/tags]