Earlier this week, we took our original risk capital out of our Micron Technologies $MU position, and now we're enjoying a #FreeRide into the summer.
We've got a somewhat more conservative bullish bet going in Analog Devices $ADI via a call calendar spread.
As you can see, we've already got exposure to the semiconductors space. But there is a ton of bullish action here so as long as it keeps working, we're going to wade a little deeper in the semis pool for our next trade.
Look, I don't know. I just follow Price. They are all just letters and numbers to me. If it trades, it's liquid, and there's a good technical setup -- that's all I need.
It just so happens that this particular company is engaged in creating Chinese internet content. Ok.
But man oh man do I like the potential reward-to-risk setup here so let's get straight to the point...
The Bull has been rolling. Have you noticed? Judging by the response I got from an innocent little bullish tweet last week during the midst of a mild pullback for stocks, you'd think I'm insane for thinking stocks have a chance to go up.
So many angry people looking for lower prices.
Maybe they'll be right someday? Chances aren't zero.
Meanwhile, I'll just keep paying attention to price and relative strength which is an excellent guide to point me into winning trades in any direction.
So for today's trade, we're going to ignore the digital assaults on our senses by the angry bears and get analog in our approach to riding this bullish wave.
Me and Strazza did The Flow show earlier in the week, and one of the names we discussed as being a possible trade to get into has finally popped its head above the trigger I was waiting for.
This one has the potential to be a quick mover, so let's get right to it!
Maybe you have some long-term holdings showing significant gains that you don’t want to pay taxes on. But you want to squeeze some additional income out of these positions because either you’re greedy (fine) or you want to practice responsible risk management (a better reason).
That’s fine. Go ahead and continue selling covered calls from your yacht. You do you.
This post is aimed at the rest of you knuckleheads who seem to think entering covered call trades as tactical short-term plays is a productive use of your time and capital.
With the NFL Playoffs getting underway this weekend (Go Bills!), it's time we put the offense on the field!
I was kicking around a bullish idea in a consumer staples name during our Analyst meeting today. The chart looks great. The setup is good. We can position for a nice potential reward versus the risk we'd incur to put the trade on. Everyone agreed that its probably a good trade.
But... is it aggressive enough?
Answer: No, it's not.
The thinking that emerged from our chat was that risk is back on in the stock market; therefore, we need to get into the most reasonably aggressive names we can. And one of the areas where risk is most definitely "on" is in the homebuilders sector.
If all we did was watch the evening news or listen to the inflation and interest rate scaremongers, we'd reasonably conclude that a long-term and painful bear market for real estate and housing in particular is a slam dunk. No contest.
If a severe real estate bear market was in the cards, would we be seeing homebuilders ripping of their recent lows the way we have over the past couple of months?
In the Spring of 2022, JC came to me and said: “What do you think about managing an options income portfolio for me? I’m looking for some more strategy diversification in my portfolios. It doesn’t need to be anything sexy, just steady.”
Ok, I’m probably paraphrasing a bit, but that was the gist of his ask.
So I got to work on putting a plan together for him. When we looked at it together, it became obvious that we should offer this portfolio to the All Star Charts community who might also be interested in some further diversification. Even if people don’t take our trades, it could be a productive learning experience for everyone.
So we got to work and we launched the All Star Options Paid-to-Play (P2P) service in May 2022.
Each trading day, we either enter a new delta-neutral options credit spread in a liquid ETF (from a list of the most liquid Index and Sectors ETFs), or we play defense on an open position with an adjustment to put us in a better position to win. And we leave resting GTC (good-till-canceled) limit orders to close our credit spreads at profit targets which get filled periodically at the whim of the markets.
No doubt Gold Bugs have been enjoying the price action in gold instruments recently. It has been a profitable few months to be long just about anything shiny -- even silver!
The latest Young Aristocrats report is out, highlighting companies with steady and increasing dividends that are also displaying strong relative strength -- a powerful combination. These are some of my favorite stocks to get long when the conditions warrant.
Today's trade is in a sporting goods retailer that just broke out and looks like it's ready to start sprinting.
This morning, our analyst team was bouncing ideas around when I posed the group this question:
"It's the beginning of a new year. Do we want to continue buying strength (as we have been)? Or do we want to buy some well-selected dips on stocks in sectors we like?"
In other words, what's our appetite?
The prevailing sentiment that won out was that we have been buying strength -- and that has worked well in some areas, particularly homebuilders, Chinese stocks, and metals stocks. But the reward-to-risk opportunities right now may be more favorable in the "buy-the-dip" camp.
So with this in mind, let's take a look at a stock in the semiconductors sector that has our attention.
Consumer Staples continue to be one of the leading sectors as we head into year-end. And if you know anything about the gang here at All Star Charts, we love to be long stocks and sectors that are showing strong relative strength.
So for our last new trade for 2022, we're going to take a big swig of an energy drink maker.
We've covered before how much I like buying stocks that are making new all-time highs. I like them, even more, when I can buy call options because premiums are low. And it's a cherry on top when the stock pays a meaty and steady dividend which lends price action support over the long run!
