Bending with Market Winds, But Not Breaking.

August 16, 2019

It’s been a fast-moving elevator ride this week in the markets.

The S&P 500 is rallying and trying to make up the lost ground after Wednesday's surprise drop after positive headlines on Tuesday that the U.S. would delay tariffs on Chinese goods.

It’s been a bumpy start to August with the S&P 500 down 4.8% from July’s all-time highs.

There’s a lot of headline noise on why there’s high volatility again.

The fear gauge known as the CBOE Market Volatility Index (VIX) for the S&P 500 sits at 19 – which means we will continue to see the market swing in either direction.

We’ve seen a market that has continued to go higher the last decade, but it’s unavoidable that this bull run is likely coming to an end.

When market winds change unexpectedly, we tend to get chopped up like we did this week.

Giving back some profits isn’t fun, but it’s going to happen.

Just like a good hitter in baseball, we have to focus on the next pitch and not let the last pitch beat us again.

We’ve had a heck of a run, closing 14 of our last 17 trades for winners.

Even better is that we recently cleaned house ahead of the big news that occurred in Gannett Co. Inc. (NYSE: GCI) and took home a 122% gain!

Market winds can shift quickly, but we are nimble enough to adapt and continue to thrive and take home winners.

That’s been our promise at Hot Money Trader: to navigate you through any market easily and profitably!

Let’s recap our week.

Portfolio Update

On Tuesday, we bought to open the Micron Technology Inc. (NYSE: MU) August 23, 2019, $45.50 calls up to $0.85 per contract.

We also sold to close our Fastenal Co. (NASDAQ: FAST) Sept. 20, 2019, $27.50 puts after hitting our stop loss price target.

On Wednesday, we sold to close Micron Technology Inc. (NYSE: MU) August 23, 2019, $45.50 calls after hitting our stop loss price target.

After-Action Report

Fastenal Co. (NASDAQ: FAST) Sept. 20, 2019, $27.50 puts

  • Date: Aug. 6, 2019
  • Reason: Our HMT spiked with short-term money betting prices would move lover. This underlying stock has been underperforming the market; I thought we could see this sink lower.
  • Outcome: We exited at our stop loss.
  • Improvements: We executed as planned with exiting at our stop loss. Prices did push lower the following day after our entry but then rebounded. Tuesday’s headlines with the U.S. easing trading war tensions didn’t help us as prices spiked higher and then faded back. We got beat on that one, but we will get them on the next.

Micron Technology Inc. (NYSE: MU) August, 21 2019, $45.50 calls

  • Date: August 13, 2019
  • Reason: Our HMT spiked with hot money betting prices would move higher in the next day of two. This is after headlines hit that trade tensions were easing. It’s been a name that we had profited on before when we followed the hot money.
  • Outcome: We exited at our stop loss.
  • Improvements: We executed as planned with exiting at our stop loss. We took our shot, but quickly got punted out the next morning. It's frustrating when that happens, but it's better to be in and out than waiting and hoping.

Your Questions, Answered!

I am frustrated because by the time I receive the trades they are above the limit price. When I try the following day again sometimes I get in, but usually not. I have missed the last two trades! Please advise on how to solve this.

– Barbara

We appreciate this type of feedback, and we're always looking to improve.
I can understand the frustration — I've dealt with it over the last 15 years in the market.

If you’re not filled at the price you entered on a day order, then that order is canceled at market close.

If you enter "good till canceled," it keeps that order open until it’s filled or canceled.

I don’t suggest leaving orders open or using "good till canceled" when trying to get into option trades.

Once you’re filled on a trade and you want to enter GTC sell orders on price limits, you can.

Markets move — you don’t want open orders that you forgot about to get filled.

If you still want to make the trade, you can cancel the order and replace it with a new limit price.

Your goal should always be to get a better fill price than what is listed on the Smart Money buy alert. If the price of the option goes over our buy-up-to price, it’s best to wait until the next trade.

So know that we always aim to accurately reflect the price at which Hands off Retirement investors are getting their fills in our official prices.

My goal is to send you a trade every week. If you missed out, there’s more opportunity just around the corner.

As always, keep sending your questions and feedback to [email protected].

My team and I will have a new trade this Tuesday.

To your wealth, freedom & 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%