It’s been another fast-moving two-sided market this week.
Sellers maintained their control going into Monday, with the S&P 500 opening lower than last Friday’s closing prices — which created a gap in prices — and closing near the lows.
We’ve seen some relief the last few days, but with the fear gauge known as the CBOE Market Volatility Index (VIX) for the S&P 500 at 19, we expect a 1% swing in either direction.
Gold and silver had a monster week, and last month I talked about how hot
money was continuing to pile into these metals.
We’ve been looking for an entry point to jump in, but commodities like metals are very volatile and we haven’t been able to pick the right spot.
Despite all this, we nailed a home run last week and were able to take home a 122% gain in those Gannett Co. Inc. (NYSE: GCI) Aug. 16, 2019, $10 calls, adding to the 22% we made on those ANGI Homeservices Inc. (NASDAQ: ANGI) Aug. 16, 2019, $10 calls.
Even better is that we cleaned house ahead of the big news that occurred on Monday that New Media Investment Group Inc., the parent of GateHouse Media, is buying Gannett Co.
After the announcement, prices sold off, and that means we traded that perfectly.
I’ve seen this pattern way too many times with hot money and knew something was going on here.
I even posted this on Twitter Friday afternoon because I was certain something was about to hit the wires…
After the announcement, prices sold off, and that means we traded that perfectly.
I’ve seen this pattern way too many times with hot money and knew something was going on here.
I even posted this on Twitter Friday afternoon because I was certain something was about to hit the wires…
Congratulations again on the two winners!
And now you have a story to share with your family and friends on how you were able to profit and ride the hot money coattails ahead of tomorrow’s paper.
Today, markets are buzzing and back alive, and we continue to thrive and take home winners.
That’s been our promise at Hot Money Trader: to help you navigate through any market easily and profitably!
Let’s talk about our newest position…
On Tuesday, we bought to open the Fastenal Co. (NASDAQ: FAST) Sept. 20, 2019, $27.50 puts.
This position is a little underwater right now with the overall market bouncing higher in the last few days.
However, this position has historically underperformed, so we’ll let this play out.
Now I’d like to jump right into the mailbag:
In the flash buy alerts, you indicate two sell prices. How do I understand these better?
-R.P.
Great question!
When I send out an alert, I’m trying my best to provide a game plan — and give you a framework to manage your risk.
The two sell prices are our mental goals of when we should exit the trade.
Once we place a trade, we are at the mercy of the markets. Stocks could be halted or news could come out and tank the stock, rendering our options worthless.
A lot of things affect the pricing of options, which makes it tough to have a hard stop loss level.
In my experience, when we make a bet, the best course of action is to let it play out but use alerts when prices trigger those levels and then exit.
At the end of the day, it’s up to you to decide and understand your risk tolerance. If a trade is making you lose sleep at night, cut it and move on.
Anytime we make a move — I will shoot you an email alert.
In your FAST trade recommendation, you suggested once in the trade to look for the following:
Stop loss at $0.28 per contract.
-OR-
Profit target at $1.00 per contract.
So buying the options for $0.75 and selling for $1.00 per contact, only making $0.25 and risking $0.75 (1:3 profit)?
Can you please clarify if we’re expecting the selling price of $1.00 OR $1.75, to make a profit of $1.00 per contact?
-G.S.
As I mentioned above, I provide those levels to provide a game plan so you’re not flying blind. I’m trying to get hundreds of readers in and out safely, and that means entry prices will vary. I typically take an average fill price I think most will get filled.
You will notice I provide more cushion on a stop exit than a profit exit. The reason is because most options trade a nickel wide. This cushion ensures we don’t get kicked out of good trades because of the two-sided market.
To be a successful options investor, you have to have specific parameters to have predictable outcomes, and since following hot money has had a high-probability outcome, we win more than we lose.
In many cases we get a spike higher, like the 122% gain we took home with Gannett Co Inc. (GCI). We can’t always play for those big gainers, but when we do, they help boost overall returns on risk.
As always, keep sending your questions and feedback to [email protected]
My team and I will have a new Hot Money Trade on Tuesday.
To your wealth, freedom, and options!
Joshua M. Belalnger