Continuing with a theme I discussed coming out of Labor Day Weekend, volatilities continue to remain low across major stock indices, within the majority of sectors, and by extension many key stocks. Until that changes, there's no need to deviate from my current plan of keeping things simple. When bullish opportunities present themselves, it is pretty simple -- I want to be long calls. There's no need to overthink things here.
Not surprising, there is a stock on our radar that it is breaking out to all-time highs with options pricing in volatility near the lowest levels seen in the past year. A perfect candidate for straight naked calls.
If you've been paying attention, we've been bullish and long Nike $NKE for a little while now. Here's our trade from July 2 where we got long calls (still holding), and here's our more recent trade where we are fading the hysteria and elevated vol from September 11th. Well, sometimes we're a sucker for what works and often go back to the well. With that in mind, we've identified some similar action in Pfizer $PFE that has us interested and is pretty compelling.
From time to time, a slowly developing opportunity presents itself and in doing so gives you multiple ways to profit -- while also incrementally reducing your risk as time goes along. This type of situation is presenting itself currently in Marathon Oil $MRO.
Continental Resources $CLR has been consolidating in a range just below 4-year highs, and recent price action has brought it to a level where I like our odds for an income trade.
Following up on our discussion from the September All Star Options conference call, we will lay out here the trade in $CME that we presented to subscribers. The stock move is underway, but there is still plenty of meat on the bone and I like the trade even more now.
I love incorporating a mix of delta neutral income trades in my portfolio -- especially after a nice run in the stock market that might be due for a pause soon.
50 days until expiration is the sweet spot for income trades, which is exactly where we find ourselves with October expiration. So for the second time this week, we'll be choosing an ETF that has elevated premiums but is stuck in a 90 day range -- the perfect type of candidate for a delta-neutral Iron Condor trade.
This is the monthly conference call for Members of All Star Options. In this call we will discuss the current market environment and focus on price and volatility behavior. Throughout the session, J.C. Parets will add commentary on the technical outlook moving forward, and Sean McLaughlin will discuss the options strategies available to profit from the market activity.
This month’s Conference Call will be held on Thursday August 30th at 7PM ET. Here are the details for the call:
It is that time in the options cycle where October options are in the sweet spot (between 45-55 day until expiration) to be looking for income trades wherever volatility pricing offers an edge.
And for our first choice for an October income trade, we're almost quite literally going back to the well, repeating an income trade that we put on in September to satisfactory effect.
I can't afford real estate in Palo Alto (yet), but I can comfortably afford to take a ride with Palo Alto's namesake security software firm Palo Alto Networks $PANW.
Today, $PANW stock popped its head above recent resistance and printed a new all-time high, flagging some bullish intentions ahead of their next earnings release in early September. And this aligns nicely with our bullish outlook in the name.
Next up in the Bull Market Rotation Wheel of Fortune: Airlines.
The S&P 500 printed a new all-time high on Tuesday (Aug 21), so naturally we should expect a broadening spectrum of sectors and stocks participating to the upside. The airlines have been a bit of a laggard in the transportation sector, but appear as a whole to have put in an important base with many names starting to breakout to the upside.
We've got a play to take flight in one of the leaders.
Logistics and package delivery services provider $UPS got caught in the volatility-triggered downdraft of late January and early February of this year. It has spent the remaining part of the year forming a base and is now showing signs of filling the yawning earnings gap from February 1. We've got a play to take advantage of this gap fill and a likely return to new all-time highs.
