Options are a leveraged instrument, and if you're not careful, it's easy to find yourself exposed to more risk than what you're comfortable with. A subscriber to All Star Options pinged me this week with some questions and I thought our discussion might be fruitful to everyone...

I was confused too. But no, $DQ is not America's favorite destination for shakes, malts, and blizzards. But it is sexy in it's own way -- it's an energy company named Daqo New Energy in one of the hottest sectors we think will be leading stocks higher this year -- Solar Energy. According to wikipedia, $DQ is a Chinese company "engaged in the manufacture of monocrystalline silicon, polysilicon, and silicon wafers, primarily for use in solar photovoltaic systems." OK, sounds cool? It really doesn't matter to us, we're just following price, and we're going to trade it with options in a defined risk spread.

It might sound like we're beating a dead horse here, but the Russell 2000 printed another new all-time high yesterday (I know, it ended up being a red day, but that volume tho...) and there's just no way I can view this with any bearish context. Sure, perhaps it's extended and due for a rest (or gasp, a pullback) but it's simply irresponsible to be spouting actively bearish broader market calls in this environment right now.

As such, the team at All Star Charts keeps digging into the sectors that are looking like candidates to lead the next leg of stock market gains higher. Today, we've got our eye on the Biotech sector. 

The team here at All Star Charts is very bullish on the Oil & Gas Exploration & Production sector as discussed here (premium). Before we get into how we're going to play it, here's a little background to give color for our optimism for the opportunity we see, from our kid off the bench Tom Bruni:

Excuse the pun, it was too easy.

Everybody loves a deal. And that couldn't be more obvious after looking at a monthly chart of Costco $COST going back to the financial crisis that bottomed out in 2009. Shoppers clearly have been filling Costco parking lots and their carts, as the monthly chart has been a beautiful uptrend with very little volatility.

One of the great things I've experienced while getting All Star Options off the ground with JC has been putting pen to paper to really codify for myself how I view options trading. It's one thing to have a nebulous sort of idea of how I approach certain options strategies and when and how I might employ them, but it's quite another to sit down and really break down how each strategy should work, how it fails, my plans for taking profits and/or cutting losses and opportunities for position adjustments.

Instead of hoarding all this brainstorming for myself, we've decided to add it to the Education section of Allstarcharts.com so that you, too, can have easy reference points for thinking through your own trades.

In JC's All Star Charts May Monthly Conference call for subscribers, there was a theme that he consistently revisited: Bonds are going lower.

There's no need to over-complicate this stuff. We could waste time arguing about what increasing interest rates means for the stock market, or yield's implications on policy decisions in Washington, the effect to be felt in the housing market, or how retirees savings may or may not be effected. That might fill airtime on SHOUT!TV, but all we care about here is positioning ourselves to make money. Leave the intellectual debates to the talkers.

We're the doers, and we want to position ourselves for further downside in bonds.

...then you simply have to get long The Granddaddy Oracle $ORCL here.

It appears Oracle has successfully digested the hit the stock took after it's most recent earnings report, and the stock is hanging just above the highs it set back in the year 2000! I could be wrong, of course, but I just don't see $ORCL holding around these levels for too much longer. There's just no way it recoups 2000 levels and then just stops here.

Earlier this week, JC pointed out that the software sector broke out to new all-time highs. I don't mean to keep harping on this, as you've no doubt read JC making this point over and over, but this sector making highs is simply not something we are likely to see if the overall market is pointing to a bear market.

The third largest component in the software index is Service Now, ticker $NOW. And we see an interesting opportunity developing.

In a recent report to Allstarcharts Premium subscribers, J.C. laid out a case why he's bullish on the Industrials sector and why that's important to the overall market. Not ever one to mince words: "we want to be buying right here right now and very aggressively. The bet is that Industrials are now heading higher and leading the market to new all-time highs." That sounds pretty convincing to me!

Please allow me to introduce myself. My name is Sean McLaughlin and I’ve been involved in financial markets as a Trader, Exchange Member, blogger, in building social communities, podcasting, training and in sales for 20 years.

Some of you may already know me or have engaged with me on Twitter, Medium, or StockTwits where I go by the handle @chicagosean. Others may know me from the 7 years I spent as Director of Community at StockTwits, and a few more may know me in my role of Sales, Training, & Strategy at Trade Ideas, LLC.

Wherever you may or may not know me from, I’m happy to be teaming up with my friend JC Parets at Allstarcharts.com to build upon his excellent and unparalleled work in providing actionable insights to the financial community.

I've been looking forward to this day all year. All Star Options is now live - Go check it out!

Over the years we've built a customer base of smart, well informed and eager to learn investors from all over the world. Active Traders, Hedge Funds, Banks, Financial Advisors and many others come to Allstarcharts for unbiased technical analysis research with invariable consistency. We service most of the largest and most powerful financial institutions on earth, but the price point is also approachable for investors trading their own accounts.