When the going gets tough, traders have a number of opportunities to take advantage of. They can look to invest in prospective mergers, where a market selloff may have depressed prices that may quickly snap back.
Another possibility is to buy into beaten-down names where activist investors are getting involved as well. That could allow for a big upside when markets move higher again.
One such trend may be underway with consumer goods giant Unilever (UL). The stock jumped nearly 9 percent on Monday on news that activist investor Nelson Peltz was building up a stake. Shares are still down 13 percent over the past year, but could end up with better returns this year.
- The ONLY Way to Play Markets Like These
Warren Buffett said, "Price is what you pay... value is what you get."
The best investor in the world knows the only way to prosper (especially in markets like these)... is to invest in VALUE.
But this $2 stock could be the last value play in the market today.
An activist at a consumer conglomerate may have ideas regarding the best way to maximize value from selling off major brands or divisions, and how to otherwise reposition the company for a leaner era.
Action to take: Revenue and earnings growth has been flat over the past year, but shares trade at 18 times earnings, a slight discount for a company with a strong basket of consumer brands. Investors can also nab a 4.1 percent dividend yield here.
For traders, the work of an activist investor can be difficult to time. The August $55 calls, last going for about $2.50, offer the ability to benefit from any such news development that leads to a further move higher in shares over the next six months.
Disclosure: The author of this article has a position in the company mentioned here, and may further trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.