The first trading week of January 2016 was one that equities traders would rather have forgotten. Chinese stocks suffered the most with the Shenzhen Composite Index and the Shanghai Composite Index recording losses in the region of 7% on Monday 4th January 2016 and Thursday 7th January 2016. The circuit-breakers tripped and trading was suspended on both days, before Chinese bourses advanced by 2% on Friday 8th January 2016. In the interim, some $2.5 trillion in equities value was wiped out and markets from London to Paris and New York were sent reeling. As a binary options trader, the safe money was on put options on all major bourses most of the week. Several tradable options emerged by the end of it all, including the following:
1 – Consider Call Options on Gold and Silver
Gold gained favor as it broke through an all-important psychological barrier before retreating somewhat. Gold is traditionally a safe-haven asset in times of geopolitical uncertainty and economic turbulence. With China in turmoil and Mideast tensions between Saudi Arabia and Iran flaring up, there has been an increase in the demand for gold. In much the same fashion, silver is also a safe-haven asset for investors and this is evident in the performance of the metal in recent days. Gold is now trading markedly higher than its 30-day average (+1.87%) and has increased by 0.53% for the day. We can expect ongoing volatility and instability in the financial markets as persistent weakness in Chinese equities will have traders and investors scrambling for safe-haven assets like gold. That China has devalued its currency will work in the opposite direction since China will be purchasing less gold. The overall trend in equities markets is bearish now and this will help gold to stabilize at a higher price in the short-term.
2 – Consider Call Options on Apple Inc. (AAPL)
If you’re looking for value stocks, then Apple is the way to go. This A+ stock is rated as a strong buy by analysts especially at its current price of $96.96. The price has slipped in the past several days owing to weakness in China and the spillover effects on Wall Street. Nasdaq analysts have rated Apple as strongly bullish (88% of 132 ratings) and this extends over a 3-month timeframe. As a binary options trader, you will be paying closer attention to the shorter-term price movements but there is no doubt that Apple is well worth buying at this juncture. The stock has a mean recommendation of 1.9 and a mean price target of $145.05 and a high price target of $200.00. Even at its low end, Apple Inc. is priced at $102. While most analysts have opted for a buy recommendation, Rosenblatt research firm has opted for a downgrade to a neutral rating. However, I stand by my position that Apple Inc. is strongly bullish (call option in binary options) and it is undervalued at its present price.
