Sometimes, the charts set up where one could make a case for a consolidation being on the cusp of breaking out. One such beleaguered company appears to be doing just that. If there's any follow through, there is blue skies ahead and I've got a play lining up on the runway to take advantage of the tailwind.
I love it when steady dividend payers breakout to all-time highs. What's better than a stock breaking into blue skies and paying you a dividend to hold on? In the recent All Star Charts monthly conference call, JC uncovered an opportunity in an insurance company stock that has us thinking about profits. Sure, we options traders don't get to collect any dividends, but it is nice knowing that yield-starved savers will keep a bid under stocks like these as long as interest rates remain comically low.
All else being equal, when deciding between two or three viable trades, I'll often choose the one that offers me the best opportunity to neutralize my "greeks risk." Meaning, if my overall portfolio is leaning a little long delta, I might favor the new trade that is short delta. If I'm long a bunch of premium and therefore have a high negative theta score for my entire portfolio, I'd likely choose to add the trade that offers me the most positive delta. My thinking being: if I can neutralize as many greeks as possible, then I put myself in position to let the individual edges and risk-reward ratios play out in my favor without getting negatively affected by any sudden changes in the overall market.
This also applies to timeframe.
A quick scan of my open positions today revealed that I have a relatively high number of open positions with October, December, and January expirations. But just a couple with November expirations. So taking an idea from All Star Charts' September Conference Call, I've found an opportunity that we can play in November.
You've got to love a stock breaking out of a seven-year base and doing so with options pricing in the lowest volatility levels all year. And when it is in a strong sector that has been among the leaders all year, I'm licking my chops.
In elementary school, nothing was more interesting to me than Space. And a quick look at my Lego collection would confirm this in two seconds flat. I was obsessed. But more in the "great unknown" way. So many questions. So many possibilities.
As an adult, I'm still fascinated by people (Elon Musk, Richard Branson, etc) and companies who are involved in trying to bring humanity into space and further exploration. And it makes me happy to see the stocks that represent these endeavors do well, because its often a clue that they are on to something, that they are making headway.
In recent days, the US Aerospace & Defense ETF, which tracks all the biggest names in this space, showed signs of making new discoveries -- of all-time high price territories.
Sometimes we spot an opportunity, but we have to be quick to capitalize on it. Fading volatility spikes is one of those situations. If we're willing to take on a little more risk in favor of a high probability setup and we act quick, nice profits can be earned. We've got a play in Gold developing right now that offers up this potential.
With markets pointing higher (if you follow price and ignore the headlines, like a responsible trader), it makes sense to take good looks at stocks coming out of strong bases. One hospital stock recently caught our attention as it is beginning to quietly emerge out of a 4-year base.
Imagine being in a business where you take a nearly risk-free slice of every transaction, world-wide. That would be a lot of money. Well, companies which do just that do exist, and they likely take up some real estate in your wallet...
Yep.
And it just so happens the charts agree with this sentiment, so much so that $VISA is fixing on (another) significant breakout. So let's see if we can take a slice out of the toll collectors ride.
The headlines certainly haven't been kind to any stock whose company does business in China. You wouldn't be faulted for being cautious in this space. That said, there is one very familiar name that in spite of it all has continued to hang in there, setting up for what could quite possibly become a headlines grabbing upside move of its own.
Continuing a theme that we started the week with, we're still on the hunt for attractive long opportunities in the strongest sectors. When markets get choppy and uncertainty about market regime change looms, I seek relative safety in the corners of the market that have continued to hold up well. And since the beginning of August, one of those sectors has been the Medical Devices sector.
And here's one of the names showing signs of a developing breakout.
