Happy quad witching day!
Quadruple witching happens every quarter — it’s when options and futures on indexes and equities expire (on the third Friday in March, June, September and December).
Back in the days of trading on the floor, today would be a busy day because positions that expire need to be rolled forward.
It’s likely we will see odd price action like a leaf blowing around. So please don’t put too much weight on what happens today.
Now, The CBOE Volatility Index (VIX), aka the “fear” index, is still above our key 15 levels, trading at 22.
In fact, the same time last year the VIX was at 12.
But don’t be concerned, because, despite the volatility, we’re able to thrive in any market.
It’s been two months since we’ve posted an official loss, but that day has come.
Let’s talk about the two positions expiring today.
Two of our December expiring trades have fallen short of our profit targets.
- Advanced Micro Devices, Inc. (NASDAQ: AMD) Dec. 18, 2020, $102 call (AMD201218C00102000)
- Hostess Brands Inc. (NASDAQ: TWNK) Dec. 18, 2020, $15 call (TWNK201218C00015000)
Unfortunately, we don’t have more time for this position to play out.
There’s nothing that you need to do, and they will be removed from your account by Monday morning.
Taking losses isn’t fun and can be painful, but without the bitter, the sweet isn’t as sweet.
The sweet part is making money and losses are part of the process.
Even though we closed out 6 winning trades in a row, we are wired to feel pain more than euphoria.
It’s easier said, but we’ll get through it together.
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!)
Buy-To-Open the Axalta Coating Systems Ltd. (NYSE: AXTA) Jan. 15, 2021, $32 call (AXTA210115C00032000) up to $0.60 per contract or better, for the day.
Right now, we’re holding:
- Sandstorm Gold Ltd. (NYSE: SAND) Jan. 15, 2021, $10 call (SAND210115C00010000)
- Plug Power Inc. (NYSE: PLUG) Dec. 24, 2020, $35 call (PLUG201218C00035000)
- Axalta Coating Systems Ltd. (NYSE: AXTA) Jan. 15, 2021, $32 call (AXTA210115C00032000)
This is our debriefing 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.
Hostess Brands Inc. (NASDAQ: TWNK) Dec. 18, 2020, $15 call (TWNK201218C00015000)
Date: October 19, 2020
Reason: Our system triggered a bullish signal after a $5.8 million New Money bet, which is a 1,800% surge in call options purchased and would only profit if shares go higher.
Outcome: Expired worthless.
Notes: We took a shot, but this didn’t play out as I anticipated. Every time the buyers tried to push prices higher, sellers whacked it back down. Unfortunately, we will have stinkers like this.
Advanced Micro Devices, Inc. (NASDAQ: AMD) Dec. 18, 2020, $102 call (AMD201218C00102000)
Date: December 7, 2020
Reason: Our system triggered a bullish signal after a $11.4 million New Money bet, which is a 712% surge in new call options purchased and would only profit if shares go higher.
Outcome: Expired worthless.
Notes: This loss falls on my shoulders. This is a scenario in which we are right on assumption, but I didn’t pick the right expiration. The day after our entry, the position was in the green, but then quickly sold off. Short-term options can generate big fast profits, but any pullbacks can quickly put you behind the Eight ball. If we bought more time, we would’ve been able to take a profit or manage the loss better than letting it expire. It’s all about results at the end of the day. I must be better and that’s my promise to you.
Have a great weekend, and I’ll have a new trade for you on Monday.
To your wealth, freedom, and options!
Joshua M. Belanger
P.S. Happy Hanukkah!