Election night is behind us, but the battle for the White House heating up.
Stocks are soaring and pushing the S&P 500 and Nasdaq is a stone’s throw from all-time highs.
However the results shake out, the market is refocused on more stimulus.
The fear gauge for the S&P 500, known as the CBOE Market Volatility Index (VIX) is holding at 29.
This is a decrease of 31% since Friday, which is known as a volatility crush.
Unfortunately, this crush affected the gains we had in our WFC calls.
We have time and let’s let things shake out before we make our next move.
- Buy-To-Open the Wells Fargo Company (NYSE: WFC) Nov. 20, 2020, $24.50 call (WFC201120C00024500) up to $0.22 per contract or better, for the day.
Right now, we’re holding:
- Hostess Brands Inc. (NASDAQ: TWNK) Dec. 18, 2020, $15 call (TWNK201218C00015000)
- Wells Fargo Company (NYSE: WFC) Nov. 20, 2020, $24.50 call (WFC201120C00024500)
Let’s keep focused and let the market come to us.
And I’ll be keeping you updated every step of the way.
Your Questions, Answered!
The mailbag is full, so let’s get to your most pressing questions.
What if a trader is buying calls or puts to hedge against a stock position? - Dave R.
Great question! Our proprietary Hot Money Monitor checks the equity markets for block stock trades that may have executed at the same time.
If we see blocks of stock tied, it could mean a stock was swapped out for calls or could be a non-directional play.
Because there are more unknowns with that, we don’t consider that a Hot Money Trade.
I would like to understand what the next step that I will be taking on my purchase of Wells Fargo (WFC) options looks like?
A. Will I be receiving an email on the next move?
B. What will be my financial obligations, if any?
C. What is the effect if I am “out of the money” or “in the money”? - J.P.
Since these options were under 50 cents, we risked the whole premium paid.
The WFC calls are in play right now and don’t expire until Nov. 20th.
These are considered out-of-the-money and they would increase in value if the stock increases.
If that happens, these calls would become in-the-money.
But when it’s time to sell, I will shoot you an email alert.
Here’s the final piece of reader mail for today.
Why are my positions in the red after I enter? - M.P.
With how options work, we’ll often have red on our screen while we wait for trades to develop.
These are supercharged instruments. That’s why they can quickly go from being down to big gainers.
Patience and persistence are key. I promise to keep a close eye on all of our positions and will let you know when you have to take action.
That’s it for me today, be on the lookout for our next profit alert!
If you want your questions answered next week, make sure you email it in today at [email protected]