Harness the Power of Options This Summer

If you ask Michael Shulman, he'll tell you there's always money to be made on the short side of the market. Michael fully agrees with Robert and Louis in that the U.S. housing market is not one to bet on right now.

That's why Michael currently has seven open "put" positions on housing and homebuilder companies.

Last week when we bought GigaMedia (GIGM), we talked about "call" options. You buy call options when you think the stock is going to go up. Well, when you think a stock is going to go down, you buy "puts." And Michael Shulman is the expert when it comes to making money from declining sectors.

One of his open put positions is on KB Home (KBH). Michael is buying the January 2010, $5 puts. This means that he expects this $14 stock to be much closer to $5 than $14 by the beginning of the New Year.

If you're not looking to add options to your portfolio, at the very least you should heed Michael's advice and avoid buying this stock.

If you are ready to harness the power of options plays this summer, you'll want to check out all of Michael's short plays in his ChangeWave Shorts service.

Hot Stocks Update

FPL Group (FPL) got a nice boost as a new climate bill passed in the House. Officially, the bill is designed to "curb greenhouse gas emissions and create an energy-efficient economy." Unofficially, it's the reason why FPL is such a great buy right now. Get more on FPL here.

McDonald's (MCD) has been pretty flat since we got on board two weeks ago, but with trouble potentially brewing over at Wendy's and other quick-service chains unable to draw new customers, McDonald's expanding menu and business is the clear winner. Get more on MCD here.

GigaMedia (GIGM) is our newest buy and the stock has jumped 8% in the last week. The move comes on no news developments or high trading volume. This is an excellent sign and goes to show that it doesn't take much to get this stock moving in a hurry. Remember that this is our knock-it-out-of-the-park play and you should be ready to cash in your gains when the stock really takes off. Get more on GIGM here.

Keep the Profits Coming Each Tuesday

This week's pick goes to show that we'll dive into any industry and explore any country to find the best stocks to own right now. It's this flexibility that has created a stellar list of consensus stocks that are all posting gains for us.

Make sure you check your email each Tuesday for your latest Red Hot Summer Stocks — these stocks can move fast, and you don't want to miss out on the profits to be made this summer.   

Until next week!

Shannon Miller
InvestorPlace Editor-at-Large

P.S. Tell me what you think about Red Hot Summer Stocks. This series is here to help you profit from the very best and highly rated stocks in the market today, so tell me what you'd like to see more of, what you like and don't like, and anything else. Simply email HotStocks@InvestorPlace.com.