We're looking abroad for today's trade in a company involved in the manufacturing and sale of connectivity and sensor solutions.

The stock is breaking out of a multi-year base and it offers us a nearby risk management level to keep our stop tight which means the potential for nice gains versus a smaller risk of loss.

In today’s Jam Session, I discussed the potential for markets to hit the pause button soon (if they haven’t already) and how that’s affecting my trade selection going forward.

Considering that some of our big winners have hit or are nearing our profit targets, or have been approaching expiration, it feels like a perfectly logical place for this pause to happen. $AMZN hit our upside price objective this afternoon!

And it might be earnings season that does it.

Earnings season is beginning again, and our first earnings casualty is already on the books with Fastenal $FAST getting taken to the woodshed this morning.

What the market taketh, I hope it will giveth back via an “add-on” trade we’ve got open in Wells Fargo $WFC. It is specifically betting on earnings being the catalyst to pop $WFC higher out of a high-and-tight flag.

The good thing about both the $FAST and $WFC trades is I have defined my risks beforehand. I don’t want my trades to become worthless following earnings, but if they do, the dollar loss to my portfolio will feel like any other small loss. No sweat.

We discuss this and more in this week’s short Options Jam Session:

Traders have made a lot of noise about the recent correction in Apple. And yes, the selloff has been large (for Apple).

But with daily trading volumes beginning to wane, it feels to me that the run has begun to exhaust itself and bears will have one more last-ditch opportunity with earnings on the horizon.

Barring something unusual, I think there will be something to disappoint both bears and bulls alike, amounting to a whole lot of nothing. Which sets up the perfect time for a sideways bet.

When putting on positions with undefined risk (naked short puts, or short strangles, for example), one question I often get asked is: “How do you determine your position size?”

This is perhaps the most important question to ask when putting on these types of trades!

I have two imprecise, imperfect ways that I decide:

In today's Flow Show, me and Steve Strazza came out swinging with an opportunity to add to an already winning options trade.

Back in late January, we entered into a bullish longer-term bet in Wells Fargo $WFC. You can read about it here. That original position still has until January 2025 to play out (another nine months).

But take a look at this high & tight flag forming on the eve on their next earning release scheduled for this Friday morning:

When I was reviewing my open positions this morning, I couldn’t help but have the feeling that all good runs must eventually come to an end. Everything goes through cycles.

As I was doing post-mortems on winning trades that recently closed, and updating stops on winning trends I’m continuing to ride, a feeling of foreboding hit me that this run feels “too good to be true.”

This isn’t necessarily true, but it has felt like any long trade I’ve put on recently was destined to be a winner. If I’m not careful, I can easily cross the chasm into blind overconfidence. That’s where most trouble starts. Certainly for me, anyway.

In the near future, I’ll probably be looking for less aggressively bullish bets. And the ones I choose will likely require longer timeframes to play out. Meanwhile, I’m beginning to favor some delta-neutral credit spreads wherever I can find favorable setups.

I touch upon this and much more in this week’s Options Jam Session:

The energy sector is looking poised to break into uncharted territory, and we too are going to break some new ground by doing an options trade we've never done before in ASO.

Calling it a "trade" might even feel a little off, considering the timeframe of this one. It might be more accurate to call it an investment. Compared to most trades we do, this one has the potential to certainly feel like one.

Are we due for the pause that refreshes?

If so, what sector is likely to remain mired in a range?

For my money, this chart seems as good as any candidate for continued sideways, sloppy trading action...

It’s common practice to follow the major stock market indexes to get clues into what kind of market environment we’re in.

This is important because when considering trades to put on, I would be better served if my next idea aligned with the current market trend and volatility profile.

But sometimes, the market (as one defines it – could be “the S&P 500” or “the Dow” or “the Nasdaq”) isn’t giving me anything conclusive to make a firm decision against. I’m getting mixed signals. This is common.

One way I have found to get a better indication of the market environment is to simply use my own portfolio as a guide.

Steve Strazza brought up charts of the energy, materials, and commodities sectors on today's Flow Show. These are "peer indexes," meaning they often trend together.

And the current trends suggest we need to add more bullish positions in these areas.

The one name that stood out the most was Freeport McMoRan $FCX:

We put on a bullish bet in biotechs a couple of weeks ago and it quickly rolled over on us. The market had other ideas.

Now here we are, a couple of weeks later, and the biotech ETF $XBI finds itself mired in a range with rising implied volatility signaling elevated options premiums:

We're getting into Squeeze Season.

The stock market (as measured by the indexes) continues to trek higher, speculative fervor keeps building (as measured by what's happening in crypto), and these forces are combining to make it a dangerous environment to be caught short in.

And if you're short a name that already has a high short interest? Look out!

So naturally, today's trade is a play on punishing the stubborn shorts in a particular stock that look like they are on the verge of getting epically squeezed.

In today's Flow Show on Stock Market TV, me and Strazza get into why we love buying short-dated calls in Carvana $CVNA: