OMF has been trending flat enough to show up on our list of stocks that are compressed. The compression signal tells us that the stock is poised to make a bigger-than-expected move in the next few weeks. Volatility expectations and options prices are relatively cheap, and there is a scheduled earnings report before the August monthly expiration that could be a catalyst for a big move. This gives us an option buying opportunity.

Read our ODDS Online Daily Trending Stock Report to get more details of why we like the idea of buying inexpensive OMF options today.

Since a compression signal doesn’t provide us with the direction of a potential breakout move, our preferred strategy is the neutral straddle. However, if you have a directional bias, you can increase your profit potential by using one of the directional trades. However, if you’re wrong on the direction, you get nothing.

If you think OMF will make a bigger-than-expected move before August 16th, consider this Straddle.

Buy the August 16th OMF 47.50 Call and Buy the August 16th OMF 47.50 Put for a Net Debit of 4.45 or better. This trade has limited risk and unlimited profit potential. If the stock closes above 51.95 or below 43.05 at expiration, this trade will be in profitable territory. 

If you think OMF’s stock price will breakout to the upside before August 16th, consider this Call.

Buy the August 16th OMF 47.50 Call for a Net Debit of 2.45 or better. This trade has limited risk and unlimited profit potential. If the stock closes above 49.95 at expiration, this trade will be in profitable territory. While the cost of the directional trade is cheaper than the neutral strategy, if you get the direction of the future move wrong, you get nothing.

If you think OMF will breakout to the downside before August 16th, consider this Put.

Buy the August 16th OMF 47.50 Put for a Net Debit of 2.00or better. This trade has limited risk and huge profit potential. If the stock closes below 45.50 at expiration, this trade will be in profitable territory. While the cost of the directional trade is cheaper than the neutral strategy, if you get the direction of the future move wrong, you get nothing.

To access Odds Online Daily and be able to see any stock you are tracking in this software, click here.

Thank you,

Don Fishback