Depending on who you ask, people might agree that consumers are feeling the pinch of inflation. The sentiment that I encounter on a nearly daily basis is: “I can’t believe how much _____ costs now. It’s insane!”

If we look at a daily chart of the consumer discretionary stocks ETF $XLY, we might draw a conclusion that consumers are beginning to feel tapped out, as the upward momentum in early 2023 seems to have run out of steam.

With elevated options premiums in $XLY, this sets up a nice options premium collection play.

[Read more…]

Yesterday’s trading action in $TLT, the 20-year treasury bond ETF, gives me confidence that it might have been a near-term low.

I’m making the bet that it’ll hold for at least a few weeks. And the elevated options premiums here give us ample ammunition to wait it out. [Read more…]

After slowly dipping my toes last week into the idea that it might be time to start getting into some new long exposure, the market’s reaction to the latest Federal Reserve action tells me the direction is still sideways until further notice.

So we’re literally betting on that today with a delta-neutral credit spread in the Russell 2000. [Read more…]

The post-fed interest rates decision hangover this week has thrown stocks back into the sideways slop zone. Therefore, until conditions change, we’re going to keep selling premium to ride this out.

Today’s trade is a defined risk premium collection play that gets us out just before earnings. [Read more…]

Future market leaders for the next bull run in the stock market are revealing themselves now. And today’s trade is in one of the hottest sectors of the moment – Energy.

Understandably, one look at this chart of NextGen $NXE might scare away the more timid equities traders among us who might fear a pullback after chasing an incredible run since the beginning of the year:

But their fear is our opportunity. Sometimes we have to do the hard things to earn big profits. Fortunately, we options traders can position ourselves with clearly defined risk while enjoying the potential for leveraged and unlimited upside if we get it right.

Here’s the Play:

I like buying $NXE February 7-strike calls for approximately 60 cents debit. This debit I pay today represents the most I can lose if there is no follow-through for this stock.

That said, if we don’t see any action higher and our calls are out-of-the-money on November 1st, then I’ll look to exit the position and wait for a better setup. Additionally, if I lose 50% of our premium (at any time) during my hold, then I’ll also look to exit to salvage what’s left of the premium.

In the meantime, if neither exit criteria are met, then I’ll continue holding these calls all the way into the month of February, shooting for the moon.

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.

~ @OptionsSean

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: 323-421-7991.

While the stock market continues to digest its recent run and weave through this sideways consolidation, we’re starting to get some pretty clear hints on which stocks will likely be leaders if/when the bull market resumes.

Today’s trade is an early bullish bet on one of those names. [Read more…]