Being Patient For Profits In A Tough Tape

October 8, 2021

Dear Trader

Despite a terrible jobs number and other economic data…

Stocks didn’t sell off as most would’ve suspected. 

That’s the funny thing about the financial markets. Something in the market doesn’t matter... until it matters. 

For instance, I'm telling everyone back in January 2020 that something big is about to hit us. 

Most thought I was crazy and even said I fearmongering. 

I continued to check my back channels of information in mainland China. 

I thought I was overselling it as markets continued to go higher in the following weeks. 

I questioned myself, but then as if a switch was turned off, it mattered overnight. 

As politicians will tell their staff, we’re not here to fix the system. We’re here to keep the wheels on long enough for the next guy.

And that’s where we are in the financial markets. 

Being active with your money is rewarding, but there’s also a mental drain that can happen. 

These are the weeks and sometimes months that can add up and take a toll. 

While we did close out another winner... we also have one that expired worthless today. 

Before we talk about that, let’s talk about the CBOE Volatility Index (VIX), aka the “fear” index, which is at 18 above our key 15 level.

From last week's reading at 21, we dropped 3 points. 

October tends to be volatile, but two-sided markets provide quicker setups. 

But that means we have to move quicker on profits and scale back our profit targets. 

Now let’s talk shop.

Portfolio Update

Today, this position will expire.

HD October 8, 2021, $345/$350 call spread

Unfortunately, we don’t have more time for this to play out.

There’s nothing that you need to do, and they will be removed from your account over the weekend.

Taking losses isn’t fun, but without the bitter, the sweet isn’t as sweet.

But remember…

The sweet part is making money and losses are part of the process.

Here’s a recap of what we did this week.

On Monday:

No action. 

On Tuesday:

But-to-open MGM October 29, 2021, $45/$48 call spread

On Wednesday:

Buy-to-open KO October 15, 2021, $54 call

Sell-to-open FB November 5, 2021, $325/$310 put spread

On Thursday:

No action.

On Friday:

Sell-to-close KO October 15, 2021, $54 call

Right now, we’re holding:

  • YELL October 15, 2021, $7.50/$10 call spread
  • ACM December 17, 2021, $70/$75 call spread
  • AAPL October 15, 2021, $150/$155 call spread
  • TROX December 17, 2021, $25/$30 call spread
  • OXY October 29, 2021, $31/$35 call spread
  • FB November 5, 2021, $325/$310 put spread
  • MGM October 29, 2021, $45/$48 call spread

Trade Journal

This is my journal which is a debrief of every trade closed or expired to analyze what happened, why it happened and how it can be done better — like what the military uses after missions.

HD October 8, 2021, $345/$350 call spread

Outcome: Expired worthless.

Notes: When it comes to short-term trading, timing is everything. We saw Hot Money betting shares would breakout, but then we got caught in a pullback.  

KO October 15, 2021, $54 call

Outcome: 23% gain.

Notes: Trading is like playing chess, but with a shot clock. You have to rely on experience and execute. The system said to close this position out yesterday, but I got too greedy and then it dropped back. Short-term options can be great, but most of them are not so great when you get caught hoping they go back to previous levels.. We made a profit, but I got lucky.  

Now it’s time to get my 7 mile run in before I head to the pool with a fresh jalapeno margarita - TGIF! 

Have a great weekend and talk with you on Monday.

To your wealth, freedom, and options!

Joshua M. Belanger

Joshua M. Belanger
Joshua Belanger is founder of CounterVest and the editor of Hot Money Trader. He has been providing ordinary investors blockbuster returns since 2008. In 2018, the average return of Hot Money Trader beat the markets by over 15%