When one of the biggest stocks in the world in one of the most well-known names in the world breaks out of a two-year base to new all-time highs, we have to pay attention. There may be a lot of ways to interpret this price action, but one thing we cannot call this action is bearish.
And today's early trading action and elevated options premiums are offering us a good opportunity to get advantageously positioned for a big move.
What Happens on Expiration Day when I'm holding long options?
I’ve gotten some questions recently about what happens to an open options position if we’re still in it when the contracts expire.
Caveat: I will rarely hold an options contract in ASO trades into expiration unless it’s a winning position and it's going my way. Profit targets or stop loss exits will usually get me out far in advance of expiration day.
I promise this isn’t a “Go-Have-a-Baby” post that talks about how the greatest thing a human can do is procreate.
I’ve recently come to somewhat believe that. But I won’t be that guy here.
My friend Michael Nauss (@michaelnaussCMT on Twitter) just welcomed his first child into the world – a beautiful baby boy – and I couldn’t be happier for him.
And it got me thinking about all the ways my perspectives on things have changed since becoming a father myself nearly 8 years ago.
The biggest change for me is that I’m only now beginning to fully appreciate the hard work and sacrifice my mother had to go through to raise me and my two younger siblings.
My father left our house and the divorce process began when I was about 7 years old. At that time, my mom was a stay-at-home mom with no source of income. And my dad, while well-intentioned, was pretty much a deadbeat when it came to finances. So she was basically left to fend for herself with no money and no family around to help out.
For this week's trade, we're selling an $XLI May 97/105 Strangle for approximately $2.85 net credit. This means we're naked short both the 97 puts and the 105 calls.
Get the full details, risk management procedures and targets for this trade here:
Volatility is not done with us yet. It ain't going down without a fight! At the time I'm writing this, $VIX is +15% on the day and +31% since Monday's close.
This has me back on the hunt for some premium selling opportunities.
And an ETF on our radar that checks the boxes of elevated premium, potential rangebound trading action, and a good fade opportunity is the $XLI Industrials ETF.
*Steve Strazza wants you all to know that HE came up with this title ;)
I have to be honest, its been hard looking for spots to put more bullish exposure on. Many stocks we like have already had significant bullish runs over the past three weeks. Buying some of these names here would feel like I'm asking to get smacked in the face by a long overdue pullback.
The commodity space is no exception. But we've found a name that looks like its just setting up for a fresh breakout so let's get right to it.
How do you get to a place where you can immerse yourself in “the Zone” to think deeply about trades, strategies, strategizing, or new ways to approach risk management?
For me, far and away the best way to enter this zone is to go for a long walk – preferably in the mountains or in a forest. Just me, maybe my dog, and the sound of the wind whispering in the trees.
On Wednesday night, I returned from four days in the Redwoods National & State Parks of Northern California. Me and a friend hiked nearly 35 miles total.
I cannot begin to describe how amazingly beautiful this corner of the world is. It was my first time there. I took some pictures and videos, but it does not do it justice. You just cannot feel it the way you do when you’re standing amongst those towering Redwood trees and the deafening silence of the endless foggy forest washes over you.
The title of this post is the sound I might make if today's trade hits its profit target, helping to offset the pain I'm feeling at the pump every time I fill up my car with gas.
I was just in California this week and paid $6.00/gallon for my rental car. Ouch!!
Today's trade is in a name that has already been a strong performer this year but is showing no signs of stopping as of yet.
For this week's trade, we're putting on a $CCJ September 30/40 Bull Call Spread for an approximately $2.20 debit. This means we're long the 30 calls and short an equal amount of 40 calls for a net debit which represents the most we can lose in this trade.
Get the full details, risk management procedures and targets for this trade here:
JC had a great blog post out this week about zooming out. In a nutshell, he was reminding us that zooming out and looking at price action from a wider lens often makes the present murky waters look suddenly clear. It's easy to get distracted by the day-to-day price action and to look at only the last few months of daily charts and conclude that a stock or an index is in one sloppy clusterjam of price action.
But when you look at that same price action, instead with weekly or monthly candles, the more recent ones will often look like insignificant noise in an otherwise smoothly trending longer term pattern.
In the post referenced above, JC shared several current examples of instruments that look sloppy recently, but the bigger picture is still sitting pretty.
One of the stocks he mentioned is currently giving us a nice pullback to get a nice entry on.
Good morning everyone! This dispatch comes to you from deep in the northernmost reaches of Northern California, on the edge of the great Redwoods National Park.
I flew out here on Sunday morning with my oldest friend (since we were both five years old). After landing and shopping for some provisions, we got a short three-mile hike in during the afternoon/early evening to get our feet acclimated. But it was just a warm-up for the 30 miles we hope to cover today through Wednesday. Yesterday, the weather was perfect, the trail conditions were excellent, and the giant Redwoods were absolutely stunning! And we're just getting started. Hopefully, the weather continues to hold up (fingers crossed!).
Of course, I brought my laptop, and since my East Coast friend was suffering from a little jet lag, he crashed early last night. That left me some time to rip through charts in my hotel room, as one, such as me, does.
During my scanning, I couldn't help but get fully distracted by this chart of $GLD:
The ASC team, as always, threw out a bunch of actionable ideas in their most recent Mid-Monthly Conference Call. As you might expect, there's still a lot to like in the energy space. But it might have surprised you to see some bullish setups in some chinese and marijuana space names. I know it did me!
But one name in the Precious Metals sector piqued my interest and when I chatted with Steve Strazza about it this morning, he was pretty excited about it.
