Happy August options expiration Friday!
We have two options positions that expire today.
There’s nothing you need to do, but I will address those in a few minutes.
The big story this week is that the V recovery is complete in the S&P 500.
The fear gauge for the S&P 500, known as the CBOE Market Volatility Index (VIX) is holding at 22.
Volatility sits at the lower end of that March peak.
But is elevated compared to levels exact price levels in the S&P 500 before the corona crash.
So that means markets will continue to whip around.
Typically, we see a seasonal sell-off as we head into October.
That means markets will start buzzing again with many fast profit opportunities
It hasn’t been the best month of trading, but that’s how it goes.
Giving back some profits isn’t fun, but it’s going to happen.
Like a good hitter in baseball, we must focus on the next pitch and not let the last pitch beat us again.
We’ve had a heck of a run going into August.
And there’s will be a lot of fast profit opportunities coming our way, so be prepared.
That’s my promise to you: to navigate you through any market easily and profitably.
Portfolio Update
Two of our August expiring trades have fallen short of our profit targets.
China Mobile LTD ADR (NYSE: CHL) Aug. 21, 2020, $40 call (CHL200821C00040000)
Box Inc. (NYSE: BOX) Aug. 21, 2020, $20 call (BOX200821C00020000)
Unfortunately, we don’t have more time for this position to play out.
Taking losses isn’t fun and can be painful. That is why position size is so important.
There’s nothing that you need to do, and they will be removed from your account by Monday morning.
But remember…
Our limited risk options allow us to trade profit opportunities with greater flexibility — and much higher potential gains than buying stocks outright.
And we’ll have a brand-new batch of trades coming in a few weeks for another shot at quick profits. (So, stay tuned!)
On Monday, we added our newest position:
On Thursday:
Right now, our open positions are:
Now we wait and let the market come to us.
And I’ll be keeping you updated every step of the way.
After-Action Report
Intel Corp. (NASDAQ: INTC) Aug 21, 2020, $50.50 call (INTC200821C00050500)
Date: Aug. 17, 2020
Reason: Our system triggered a buy signal after $36 million in notional value was placed, that would only profit if shares soared higher.
Outcome: 10% gain.
Notes: You executed this perfectly, but I put us in a tough situation by having to react so quickly trading weekly options. Our system was right as soared higher on the news. I’m aggressive and was swinging for the fences because I wanted you to nail a big fast triple-digit gain. We learned and move forward.
China Mobile LTD ADR (NYSE: CHL) Aug. 21, 2020, $40 call (CHL200821C00040000)
Date: July. 6, 2020
Reason: Our system triggered a buy signal after $3.5 million in notional value was placed, that would only profit if shares soared higher.
Outcome: Expired worthless.
Notes: We took our shot, but this didn’t play out as we anticipated. Loses will happen, but keep in mind, though, that taking a 100% loss on a cheap option trade is often preferable to taking a smaller percentage loss on a stock trade. And the result – even a 100% loss – will have you better off than the equivalent stock trade. Another benefit of a conservative options strategy is that it leaves capital available to be more strategic.
Box Inc. (NYSE: BOX) Aug. 21, 2020, $20 call (BOX200821C00020000).
Date: July. 20, 2020
Reason: Our system triggered a buy signal after $14.6 million in notional value was placed, that would only profit if shares soared higher.
Outcome: Expired worthless.
Notes: Alongside our signal, share prices were a stone’s throw from recent highs at the time. I thought we would rally back into highs alongside other work from home trades. I was head faked and the premium on those options deflated quickly. Sometimes the bad guys win, and this loss falls on my shoulders.
I’m looking forward to answering your most pressing questions this Wednesday.
If you want yours included, send yours now to [email protected]
Have a great weekend and I’ll have a new trade for you on Monday.
To your wealth, freedom, and health!
Joshua M. Belanger