We've got an oil stock on the doorstep of multi-year highs, a recent shakeout that probably rinsed out the hot-money crowd that came into the stock following their latest earnings report, and implied volatility plumbing new yearly depths.

This sets up an excellent opportunity to take a flyer on a simple long calls trade.

Let's dig in!

There’s a profound mental shift that happens when you flip from being in positions where bad luck could damage or ruin your trading account, to being in a position where the unexpected might actually make you a ton of money!

For options traders, an excellent example of these two positions is a short straddle vs. a long straddle.

In a short straddle, a trader is naked short an equal amount of calls and puts at the same strike and expiration. The PnL graph of a hypothetical 100-strike short straddle looks like this:

You’ll notice that as long as the underlying price (as displayed along the x-axis) stays +/- $20 from today’s price of $100, the trader will likely earn a profit as options expiration approaches.

“Why do you rob banks?” authorities asked notorious bank thief Willie Sutton.

His response: “Because that’s where the money is.”

We're not planning on robbing anybody, but if today's trade plays out like we think it can, it might feel like we're stealing. Only, we won't need to worry about the authorities coming after us, nor will we need to feel bad about it.

Our Analyst Willie Delwiche says that a basic requirement for many bullish ideas right now is that any stock or ETF in question needs to be above August highs. Anything below August highs is subject to a rude reversal. I'm on board with this line of thinking.

So, today's trade is in an American bank that is above its August high and showing signs of wanting more.

Am I being creative with my trading?

Am I tinkering with new ideas, new money management algorithms, new mindsets, new products, new timeframes, or new workflows?

We don’t need to be trying all new things all the time. But spending time thinking about divergent ideas is a valuable practice.

When we exercise our creative muscles, we might find nothing other than a journey down an empty rabbit hole. But sometimes, we have epiphany moments that change the way we operate. These can be minor, value-added ways – or maybe even drastic, wholesale change kinds of ways.

With strength starting to stand out in more and more sectors, we have a few good setups that we like for long trades here.

In chatting with our Head Technical Analyst Steve Strazza today, he pushed me in the direction of today's trade by highlighting the fact that if this one moves, its likely to move much faster and stronger than a couple of the other ideas I was interested in.

And the options in this stock are set up in a way that we can play this idea with a simple long calls trade. I like that. So let's dig in.

We can't argue with price.

And price continues to tell us the Energy bull market still has legs.

Today's trade is a case in point where trading action today announced a declaration that an old-school oil services name wants to continue climbing higher.

The concept of “Tilt” is often discussed when things have gone awry. It’s usually associated with poor risk management and sloppy trading that has led to larger-than-expected losses.

You can no doubt find endless stories of traders in every timeframe who have gone on tilt and proceeded to wreck their month, their capital, and sometimes even their careers.

We’ve all experienced some degree of this in our own trading. It comes with the territory. It takes a rare human who possesses the mental fortitude to stay completely focused no matter what’s happening to their portfolio. Those people are out there – but they’re hard to find.

The downsides of going on tilt when our trades or strategies aren’t working out are fairly obvious.

But we rarely talk about when we go on tilt with a winning position!

Well, that was fun!

Yesterday we were treated to the latest interest rate hike from the Federal Reserve and a speech and Q&A with Fed Chairman Powell that apparently wasn't well received by the market as stocks slid furiously into the closing bell and continued the selloff into this morning.

Where we go from here is anyone's guess. Still, I'd like to take the opportunity to continue taking advantage of consistently elevated options premiums and put on a delta-neutral credit spread in an area of the market where I think some sideways rangebound action may be setting up into the end of the year.

How do I measure performance?

In a nutshell, this is a question I received from a member of the All Star Charts community today.

Well, it depends. 

The short and obvious answer: I trade to make money. 

If I’m making money, good. If I’m not, bad.

Of course, there are also more nuanced answers and considerations – some more relevant than others. They come down to relative performance.

Our commodities analyst Ian Culley couldn't have said this any better:

Energy stocks refuse to lose.

We can’t deny the relative strength of the energy space, whether we’re talking about stocks or commodities. But it’s been equities over the raw materials for months now.

They just continue to grind.

Today's trade takes us to Midland, Texas, home of the Permian Basin -- one of the richest deposits of oil and gas in the world.

"Old Economy" stocks are drawing our attention again.

Our Head Technical Analyst Steve Strazza says: "these old economy stocks are all beating earnings and taking leadership roles" and he cites companies like Caterpillar $CAT, Deere $DE, as well as energies, homebuilders, and transportation stocks.

Today's trade is an expression of the continuation of this theme, and our target stock is offering us a nice pullback to enter into.

We continue to be handcuffed by earnings season. Some of the best setups we like right now are in stocks slated to announce earnings over the next week or two. As an options trader, I don't like to position ahead of imminent earnings announcements. That is tough binary risk to control.

Today's trade has earnings coming up in a little over a month from now, so that'll have to do. At least it gives us some time to build a little cushion. Because if we're wrong in this trade, it's likely we'll find out pretty quickly over the next two weeks.