In today’s Daily Digest, we’ll review:
- New position in XLP.
- No adjustments are needed today.
- No exits since the last report.
- Current status of open campaigns.
Let’s dig in! [Read more…]
Expert technical analysis of financial markets by JC Parets
In today’s Daily Digest, we’ll review:
Let’s dig in! [Read more…]
I don’t make money on my couldas, wouldas, or shouldas.
I’ll often fall into the trap of looking at a chart and kicking myself for not taking action at what appears – in hindsight – as an obvious level to have taken some profitable action.
If I had a dollar for every time I uttered: “If only I’d ______”, I’d be typing to you from my palatial estate in the South of France.
Regret is a powerfully negative emotion we must do our best to avoid. It festers like nothing else if left untreated.
Yesterday’s trades have no bearing on today’s setups. Whether I won or lost yesterday does not indicate whether I’ll enter profitable trades today. I’m neither more nor less likely to trade like a genius today.
Every day, every event, every moment is unique. Sure, there will often be similarities to times in the past, but whatever’s happening now will ultimately bear its unique fingerprint.
We can only act upon what is directly in front of us. We have to keep taking our signals as they come. I never know which trade or series of trades will be the ones that make my month or my year in advance. I can only know that after the fact.
The only thing I know with certainty is that if I don’t follow a plan, then I’m lost and will likely be unsatisfied with the end results.
Profits rarely accrue in straight lines. There are usually pullbacks along the way. Sometimes significant ones. How we deal with these drawdowns is what separates the winning traders from the losing traders.
It’s OK – even good! – to learn from my past mistakes. But dwelling on them and regretting the missed opportunities holds me back.
I ain’t got no time for that! I’ve got places to go.
Trade ’em Well,
Sean McLaughlin
Chief Options Strategist
All Star Charts, Technical Analysis Research
On today’s special Tuesday edition of The Flow Show, Steve Strazza and I worked through a couple of trade ideas.
The one that feels more urgent to put on today is the trade in Sea Ltd. $SE. Here’s the chart Steve shared in the show today:
We think a fill of that gap below 55 might be just the thing this stock needs to mark this year’s low as a more permanent cycle low. And this stock has shown the potential for big moves in the past.
We’re going to use this elevated options premium as a way to finance the purchase of call options:
And with two earnings reports scheduled to be released before these options expire in June, we’ve got two catalysts that might send this stock higher.
Here’s the play:
I like entering a Bullish Risk Reversal in $SE, selling short the June 35 puts, and using these proceeds to purchase an equal amount of June 65 calls. Combined, the two trades should yield a small net credit of around 50 cents. And this credit is ours to keep if $SE goes sideways and closes above $35 per share at June expiration.
Of course, we’re not in this trade just to earn 50 cents. We’re in it to be owners of the June 65 calls at no cost to us.
That said, because of the naked puts, this position will require margin (about $3500 per one-lot), and we are subject to theoretically unlimited downside risk. So we’ll be very mindful of this position if it does not behave.
If we see $SE close below $41 per share, that will be my signal to reduce my open risk. I will do so by purchasing June 30 puts to define my risk. If $SE continues even lower and sees a close below $37.50, that’s my signal that we’re early or wrong and I’ll look to close the entire position to protect against any further losses.
Assuming no closes below $41 and 37.50 happen, then I’ll continue holding the position into June, knowing that the worst-case scenario for me is I simply keep the 50 cents premium for my troubles, but I’m holding the potential for unlimited upside with the paid-for June 65 calls.
We’ll review this trade during our free weekly Options Jam Sessions on Stock Market TV in the coming weeks as any of the above milestones come into play.
If you have any questions on this trade, please send them here.
If you missed last week’s video Jam Session, you can catch a replay on Stock Market TV.
P.S. We do trades like this regularly. If you’d like to leverage Best-in-Class technical analysis into smarter directional options trades, try out All Star Options Risk Free! Or give us a call to learn more: 323-421-7910.
In today’s Daily Digest, we’ll review:
Let’s dig in! [Read more…]
In today’s Daily Digest, we’ll review:
Let’s dig in! [Read more…]
One of the things I’m trying to be better at this year is letting my winners ride.
In the past, I would often look to reduce my open risk in a winning trade too quickly because I was fearful of giving back hard won gains. I would let my emotions or my PnL dictate when I should exit a portion of a winning position.
Letting my emotions dictate anything is often a recipe for disaster – certainly for me.
Emotions are not an objective reason to exit a trade. We need to let PRICE tell us when our trades are invalidated or vulnerable. Price doesn’t lie, but emotions often do.
Easier said than done. Especially right now. [Read more…]
In today’s Daily Digest, we’ll review:
Let’s dig in! [Read more…]
I believe the options market is underpricing the possibility of a downside surprise following earnings coming up in Hormel Foods $HRL.
So we’re going place a long-shot bet that will pay gluttonously if we’re right. [Read more…]