It’s been a mixed bag to start the week.
The Nasdaq stocks have been moving higher while the Russell 2000 and S&P 500 are flat.
There isn’t a lot of market-moving news out there, which is good because I’m 38,000 feet high heading back to Chicago.
The slow start to the week didn’t stop us from locking in another triple-digit gain in our VALE calls.
If you look at those calls today, they got whacked!
That is why always I preach that we must take profits when we earn the right.
This recent winning trade makes our SIXTH straight real-money gain!
Now, the fear gauge known as the CBOE Market Volatility Index (VIX) for the S&P 500 is at 20 and below our key level at 15 — indicating that volatility can rear its head anytime.
But as we’ve seen, volatility is good for us.
Now let’s talk shop…
Buy-To-Open the Vale S.A. ADR (NYSE: VALE) Dec. 24, 2020, $16 call (VALE201224C00016000) up to $0.22 per contract or better, for the day.
Sell-To-Close the Vale S.A. ADR (NYSE: VALE) Dec. 24, 2020, $16 call (VALE201224C00016000) at the market.
Right now, we’re holding:
- Hostess Brands Inc. (NASDAQ: TWNK) Dec. 18, 2020, $15 call (TWNK201218C00015000)
- Sandstorm Gold Ltd. (NYSE: SAND) Jan. 15, 2021, $10 call (SAND210115C00010000)
- Plug Power Inc. (NYSE: PLUG) Dec. 24, 2020, $35 call (PLUG201218C00035000)
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.
Why do you recommend selling all our position at once instead of selling half? - Rob E.
The short answer is winning and making money is fun!
The older traders on the floor used to say, “you can't go broke taking a profit.”
There's no better feeling than earning the right to take profits on your winning trades.
To create consistency in the financial market, you must have a consistent process.
Back when I was a professional, that is how we managed our positions.
There's nothing more frustrating than locking in your gains only to see the prices of those contracts go higher the next day.
But, if the prices drop the next day, you feel like a genius.
These types of targets seem to be a common practice with other services.
Every investors’ risk tolerance is different, and you must decide what’s best for you.
Often times, the options contracts we trade in the New Money trading system are short-dated.
That means we are looking for a big move and then to cash out.
If you're worried about missing out on more potential profits, you can sell half of your position.
That way, you can take profits and reduce risk.
But they could drop in value before hitting your next target.
Look how those VALE calls we sold for a gain dropped lower today.
I found success in keeping things simple and why we don't do anything too fancy.
Simple, but smart money management.
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]
Joshua M. Belanger