As July gets under way, it’s time to review positions with July options that remain open (haven’t already hit profit targets or been stopped out).
Most trades I put on for All Star Options tend to have a minimum duration of 30 days (short premium plays) and often as long as 6-8 months (for long premium plays). As options approach expiration, greeks like theta and gamma start to become my enemy and whipsaw my P/L. Therefore, as options and spreads get into the expiration month, my best practice is to put each position on notice — it’s time to take action.
Well, since we're all stuck at home for the foreseeable future, we might as well spend some money on making "home" the best we can make it. Those long dormant "some day" projects that have been rattling around our brains all seem to be taking on a smidge more importance these days.
Americans seem to be getting back to work -- at home, ON the home. The chart of Home Depot $HD share price certainly bares this out as we're currently hanging out at levels above the pre-coronavirus selloff:
In the most recent ASC Monthly Conference Call, JC was bullish on Slack Technologies, $WORK. So, it's time to get to work on today's pullback and take advantage of the opportunity to participate at better prices.
Steve Strazza posted a great piece on a bunch of stocks in the Biotech space that are setting up for some nice runs. And he outlined 6-12 month price targets for all of them, should the move materialize. There are some robust gains to be had here:
As long as price is above its 2015 highs near 134, we don’t want to bet against this breakout. Sure, we’d like to see momentum register an overbought reading and finally confirm these new highs, but price is always the final arbiter of truth… and right now, it’s pointing higher.
From an options trader's perspective, unfortunately there isn't a ton of options volume and open interest in many of these names. This is a bummer.
But have no fear, there's still a smart, risk-defined way to play the space.
Bullish internet stocks continues to be a theme that interests me. Regardless of your political affiliation or taste for conspiracy theories, the effects of the pandemic are still being felt and life doesn't appear to be getting back to "normal" any time soon.
This means many people still need ways to find ways to shop and entertain themselves at home.
In the latest monthly conference call for All Star Charts subscribers, JC highlighted some stocks in the internet sector that should continue to benefit in this tape. Does the story help? Sure, but more importantly the charts are telling the real story.
Coming out of the most recent All Star Charts Monthly Conference call, one of the themes that JC stressed was the continued stream of bullish setups in the strongest sectors, and most notably Internet Retail. Makes sense, right? Outside of grocery shopping, not many people are heading to the local mall for any unnecessary "retail therapy."
Additionally, exercise-crazed Americans who've suffered their favorite gyms and yoga studios being shuttered for several months now are exploring options to get their exercise fix at home. Sounds like a perfect setup for an internet company that sells exercise equipment!
Here's JC on the opportunity setting up in Peloton $PTON:
If you believe the longer-term uptrend is still in tact, then you have to love opportunities to buy on the dip during market pullbacks.
And the best place to look for these dips is in the strongest sectors that have been leading us higher since the depths of March. The software sector is in my sights today.
In a recent post on Chinese Internet stocks, the team laid out the bullish case for why many of these names look set up to run. Since publishing this post, many of the names discussed have indeed begun breaking out higher.
And one of the names with a pretty impressive base is looking like it's about ready to join it's friends.
Hard to believe some low volatility setups are appearing all over the place, but that is the market we are in. The "bull market" in stocks continues higher, seemingly unabated. Who am I to fight it?
And where else should we play but in names that continue to benefit from the "work-from-home" and social distancing mindshift that is happening on a global scale? Like Social Media.
I like to keep a few delta neutral trades active in the portfolio at all times (if I can). It's a good diversifier and also benefits from sleepy or sideways markets that tend to not help any of my directional trades.
So I regularly scan my list of the most active optionable ETFs to pick out the ones with the highest implied volatility and charts that look like the potential for sideways action setting up (ideally). And once again, for the 3rd month in a row, The utilities sector is standing out for me.
The last two strangles worked out. This time, we're gonna do a slightly different twist.
Last week, the guys published a bullish piece on Chinese internet stocks. Since then, a bunch of them have already taken off and I don't feel like chasing here. However, one name that wasn't mentioned is setting up for a potential "catch up" trade and the time feels right to jump in.
