Zacks.com Featured Expert Kevin Matras Highlights: Assurant, Acuity Brands and Potash.

CHICAGO -- Kevin Matras explains why a good stock screener can be your best tool for picking options. Stocks in this week's article are Assurant, Inc. (NYSE: AIZ), Acuity Brands, Inc. (NYSE: AYI) and Potash Corporation of Saskatchewan, Inc. (NYSE: POT). Click here for the full story exclusively on Zacks.com: http://at.zacks.com/?id=109.

Screen of the Week written by Kevin Matras of Zacks Investment Research:

This week, I want to talk about options. More specifically, I'd like to explain why a good stock screener is the best tool for picking the right options.

Regardless of whether you're buying options or writing them, you not only have to be right on the stock's direction, but also on its timing. Even the most sophisticated of options strategies requires the investor to have at least an idea as to what the stock will or won't do within a certain period of time.

Often times, people who buy options with more time in order to be safe are forced to buy options further out-of-the-money because of the cost, which ultimately reduces their chances of profitability. But by backtesting a stock-picking strategy to see if your stocks typically go up as soon as they're identified, you can buy less time and closer-to-the-money (better) options. Simply put, you can make better decisions as to which options to get into.

For example, let's assume we're buying calls; if you know your stock-picking strategy has a high probability of picking stocks that go up within the first few weeks, you won't have to waste your money on purchasing options with excessive time. (As you know, `time' does indeed cost money when it comes to options, i.e. time value or extrinsic value.) And the less needless time you buy, the more money you'll have to spend on buying an option that's closer to the money or even in-the-money.

I won't get into an options lesson in this article, but too many people treat option buying as a lottery ticket. They'll buy the cheapest options (usually meaning several strikes out-of-the-money) and hope for an explosive move (which they'll need if they're too far out-of-the-money). Unfortunately, these moves often never come. And even when they do, often times by expiration, their time value has eroded with no intrinsic value at all.

So what does all this mean? Make sure you screen for good stocks!!!

And make sure you know what the probability is for those stocks to move, say within the next week or month, etc. And the only way to really know is to backtest your screening strategies.

This way, even a crummy option strategy will have a better chance of profit. But with better knowledge of your stocks' movement potential, you can employ a better option strategy for even bigger gains.

Here's an easy way to get started. In the Research Wizard, some of our best and winningest strategies come loaded with the program. Simply add the filter; `optionable' (meaning these stocks have options). Add the optionable filter to these strategies and then go find the best options.

Here are three optionable stocks from some of my favorite stock screening strategies (for 6/3/08):

AIZ Assurant, Inc.
(from the Winning ways screen)

AYI Acuity Brands, Inc.
(from the Increasing Cash Flow screen)

POT Potash Corporation of Saskatchewan, Inc.
(from the EPS Growth Past and Present screen)

Get the rest of the stocks from each one of these screens and start making better stock and option decisions today.

And remember, the key to successful stock picking is in discovering those screens that have produced profitable results in the past. And the key to better option selections is in knowing what to expect from your stocks (and when). And how will you know? By backtesting! Click here to find out more about our free trial to the Research Wizard stock picking and backtesting program: http://at.zacks.com/?id=111.

Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.

About Screen of the Week

Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine. But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use. Each week, Zacks Profit from the Pros free email newsletter shares a new screening strategy. Learn more about it here http://at.zacks.com/?id=112.

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Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros http://at.zacks.com/?id=113.

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