This week will be an opportunity for me to practice the art of giving up control. It will also be an incredible opportunity to practice acceptance and patience.
The market is open and I’m typing this piece while traveling 30,000 feet above Midwestern corn fields en route to New York City.
Thankfully, I’ve got internet access on the plane and can keep tabs on the market and my positions. But it’s not perfect. Anyone who’s tried to work with airplane WiFi knows it isn’t always as reliable as we’d like it to be.
I’m headed to NYC to reconnect with the All Star Charts team, celebrate our friend Brian Shannon in honor of his recent book release, and attend the Chartered Market Technician’s 50th Annual Symposium.
All week, I’ll be gathering with some of the smartest market minds, driven traders, and portfolio managers around. I’m hoping to sponge as much great content and smart ideas as I can possibly cram into my cranium.
The challenge for me will be in managing my open positions — particularly my highly active index options trading.
In an effort to provide some much-needed portfolio diversification, I'm adding a delta-neutral credit spread to the mix.
There aren't a whole lot of juicy premiums out there (thank you plummeting $VIX!), but there is an ETF in a sector that looks set up for some sideways digestion over the near term that should play nice with a short Strangle.
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.
Finally, a setup I love that has earnings out of the way! There's light at the end of the tunnel. And no surprise I find this setup in a strong sector that wants to lead the market higher.
We're going to leverage some cheap options to position for a breakout to 52-week highs in this big cap name.
I’m in the process of creating a formal “business plan” for one of my trading strategies.
In 2002, I went through an arduous experience of creating an operating agreement, disclosure documents, and strategy explainers to attract investors as I built a small commodities hedge fund from scratch. Ignorance was bliss.
It was a chore, but a worthwhile investment in my time and energy because I ultimately won the business and started the fund. Success!
Now I’m entertaining the idea of managing OPM (other people’s money) again, and I’m reminded of the rewards of this process.
For a swing trader like me, earnings season is always tough. I often find myself in a situation where my favorite setups have a looming earnings release on the nearby horizon, introducing binary risks that make me uncomfortable.
And this season is no different. All of my favorite setups right now are fraught with earnings risk.
But I've found one opportunity where a pending earnings release may actually benefit us, allowing us to get positioned at attractive prices for a post-earnings run.
It used to be a big day. Back in the day (cue old person lecturing) we used to only have monthly options expirations. And because of this, the third Friday of every month tended to offer up some fireworks on the regular.
These days, daily expiring index options and weekly expiring stock options have kinda taken the starch out of the monthly happening. Boo.
Call me old fashioned (just don’t call me old!), but I still prefer to do my directional options trades – and most of my delta-neutral option spreads – in regular ol’ monthly expirations. And there seem to be plenty of traders out there like me because we still see the majority of the open interest in the monthlies.
I’m bringing this up because I’ve got some April long calls on the books that are still working for me (barely).
My man Steve Strazza's reaction to this trade idea: "Yes! Bios have got some catch-up to play!"
I concur.
Though, I think we've got some overhead resistance that may slow the roll heading into summer. But that's ok -- we can use that to our advantage with a calendar spread.
There are some big cap software stocks on the verge of resolving out of beautiful bases to the upside. Of course, we have to be on the ball to avoid earnings landmines as it's that time of the year.
That said, my favorite chart among these big caps that still has breathing room in it (about six weeks) before we have to deal with their next earnings report is Salesforce $CRM.
On Monday evening, my family ordered some takeout barbeque from the local joint here in town. Everything was delicious and I went to bed that night feeling just fine.
But I awoke around 1 a.m. to a twisting feeling in my stomach. Before long I was keeled over my bathroom toilet, puking my guts out. I wasn’t able to sleep at all, as I always felt I was moments away from hurling again.
The upchucking eventually subsided by sunrise, but I was left battling a ping-pong game of sweaty overheating and teeth-chattering cold shivers. All of this continued in between bouts of near-total unconsciousness as I could barely get myself out of bed for more than five or ten minutes at a time.
And when I was able to get on my feet, every muscle in my body ached and it took a herculean effort to put one foot in front of the other in a feeble attempt of movement that looked something like walking. It was as if I’d suddenly aged 40 years and needed a walker.
Food poisoning is a bitch. It was worse than I ever felt when I had Covid a year ago. Way worse.
Did you know Motorola has been around since long before the cellular phone?
In the late 90's and early 2000's, Motorola was one of the go-to cell phone manufacturers. I owned several, personally. To this day, I still maintain that I've never had a clearer signal with zero audio delay than I did with my Motorola StarTac phone circa 2001.
This all came up this morning when internally, while discussing the setup in the $MSI stock, we were all kind of surprised that Motorola, based in Chicago, is a one-hundred year old company! Wow.
Clearly, this is a company that has gone through many pivots to lead new technology development.
Of more immediate concern to us options traders is we've got two potential catalysts that can drive some quick gains for us.
Fair warning: today's trade is in a company that will be reporting earnings early next week. I generally try to avoid entering trades ahead of earnings. But its that time of the season where its kinda hard to avoid earnings. They are happening. We just have to deal with it.
That said, we'll control what we can control: The amount of risk we take, and our time duration for the position to recover, if needed.
I recently came across a video on youtube from a very smart man – whom I respect and have had several favorable interactions with – that made me shake my head.
But before I throw any shade on any other professional colleague, let me be the first to say that I’m no genius. My shit stinks too, and I’m sure I’m equally guilty of throwing questionable ideas or thoughts out into the metaverse from time to time. I’m human, just like everyone else.
So here’s what got me rankled.
The video had a catchy title like: “How I made fourteen hundred dollars in one day trading 0-DTE options.”
Ok. I’m interested. I like to make that kinda money each trading day. Tell me more!
The short video went on to demonstrate how this trader sold a slightly out-of-the-money naked put in $SPX options expiring that same day – a day in which SPX rallied from start to finish making the put expire worthless. This allowed the trader to keep the $1400 he collected from selling that one put contract short near the open of trading that day. That’s pure profit, baby!
Cool. Great trade!
But here’s the thing. Actually, here are several things…
