In the latest monthly conference call for All Star Charts subscribers, JC lays out a compelling case for being long leaders in the transportation space -- notably trucking and railroads.
We're not one to step in front of trends, especially those riding on rails, and with a well received earnings report released last week pushing $CSX to new highs, we see nothing but green lights ahead to our price target. And when momentum is coupled with collapsing volatility, it sets up pretty compelling opportunities to participate in some highly leveraged upside.
I have a Google Home at my house and we ask it questions all the time. I asked: "Hey Google, do we really need to call google Alphabet?" and she responded: "Sorry, I don't understand the question."
Yeah, me neither.
In case you've been living under a rock, Google $GOOG printed a new all-time high today (Tuesday) and continues to ignore headlines like a good soldier. And with earnings on deck, scaredy-cat options market makers are bidding up prices in options ahead of July 23rd's release. This sets up a nice trade for us.
You see what I did there? The title of this post is a play on the stock we're about to put an options play on -- Workday $WDAY. You're welcome. I'll be here all week. Tip your bartender.
It's summer time. Sometimes during dull market action we have to keep ourselves entertained right?
Well, nothing entertains me more than profitable options trades. And with earnings on the not-to-distant horizon in $WDAY, I see a scenario setting up that can get us paid for our work.
Before we start again with Season 2 of the Allstarcharts Interviews, I wanted to introduce you to our new Chief Options Strategist at Allstarcharts.com - options wizard Sean McLaughlin! Many of you already know him as @chicagosean. When it comes to the Greeks, this is the guy you want on your side, so we're lucky to have him. In this podcast episode, Sean and I talk about Trading, Social Media, Taking Vacations, Books to Read and of course, Options! This was a fun conversation to have and I think there are a lot of pieces of value to take away from this one.
I love getting questions from our subscribers to All Star Options. It shows they are engaged and eager to learn or to get clarification as they learn our processes. We get questions every day. Here's one I received recently that I thought held a lesson we could all benefit from:
We are in the tricky part of the quarterly cycle where upcoming earnings warrant caution on options trades in individual names. Premiums get elevated ahead of the uncertainty heading into each earnings event, so that makes being long premium an undesirable idea. Meanwhile, it makes me uncomfortable getting short elevated premiums into these events because of the risk of an outsized move blowing through any short strikes I may have on.
And of course and ironically, with summer in full swing, broader indexes are seeing declining volatilities which makes it tougher to put on good credit spreads.
But your boy hasn't given up looking for opportunities, and I see a good one shaping up in the Utilities space.
Perhaps it's the overwhelming number of afflicted Bears coming in to emergency rooms, pharmacies (for pain meds), and therapists couches across America that is fueling the continued bull market in healthcare stocks? Interesting thought.
But we're not fundamentalists here, we just follow price action, volume, and with our options trades -- volatility. And those three things are pointing to a great opportunity for profits in the $XLV Healthcare ETF.
Jack Dorsey, CEO of both Square $SQ and a little-known company named Twitter $TWTR, is having a pretty good year. How good? Well, in the last 365 days, $SQ is up 177% and Twitter is up a more modest 158%. Boy, the sentiment in these two names sure has changed. It seemed like just yesterday Jack Dorsey was America's most hated CEO. "Pick one!" the masses screamed. Everyone thought he had taken on too big of a workload as the stocks of both companies languished in prolonged downtrends. Amazing what twin upward trending stock prices can do for Public Relations.
While both stocks look compelling here, we're going to take advantage of some attractive volatility being priced into $SQ options and an earnings event to play both sides against.
With two weeks to July expiration, it's time to review our July positions that will be expiring soon and take any actions that are necessary to reduce risk or take profits. This is the time of the cycle when the theta cost of our long premium plays will start to accelerate against us, or the gamma risk in our short premium plays will start to ramp quickly against us. No bueno in either case.
With earnings for Apple coming up on July 31, there's just enough time, worthwhile juice, and a significant price level to lean against in order to potentially bite off some quick profits in $AAPL while limiting our downside risk. Since we don't have much time, lets cut right to the chase...
