July Expiration - Here Are Your Details Inside

July 17, 2020

Happy July options expiration Friday!

We have two options positions that expire today.

There’s nothing you need to do, but I will address those in a few minutes.

We’re seeing odd price action today because it’s options expiration, which is like a leaf blowing around.

This happens because option positions that expire in-the-money on today’s market close need to be rolled forward or closed.

Despite broad markets hitting the pause button this week.

You’ve seen your account soar higher by closing out back-to-back-to-back winners.

That means we’ve cashed out 8 out of the last 9 trades as winners!

Volatility continues to create opportunities.

But it’s also why timing and managing our winners are essential to keeping our profits.

That’s the power of options!

The fear gauge for the S&P 500, known as the CBOE Market Volatility Index (VIX) is holding at 26.

That means we are still 2x the average level of volatility, so we will continue to see markets whip around.

Buckle up for next week, we have the EU summit over the weekend. Congress is voting on another stimulus along with Microsoft Intel and IBM earnings releases.

Portfolio Update

Despite our recent streak, two of our July expiring trades has fallen short of our profit targets.

  • Novo Nordisk A/S ADR (NYSE: NVO) July 17, 2020, $72.50 call
  • GOODYEAR Tire & Rubber Co. (NASDAQ: GT) July 17, 2020, $5 put 

Unfortunately, we don’t have more time for this position to play out.

Taking losses isn’t fun and can be painful. That is why position size is so important.

There’s nothing that you need to do, and they will be removed from your account by Monday morning.

But remember…

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!)

On Monday:

  • Buy-To-Open the STMicroelectronics ADR (NYSE: STM) Aug. 21, 2020, $35 call (STM200821C00035000) up to $0.45 per contract or better, for the day.
  • Buy-To-Open the Nordic Amer Tankers (NYSE: NAT) Oct. 16, 2020, $5 call (NAT201016C00005000) up to $0.54 per contract or better, for the day.

On Tuesday:

  • Sell-To-Close the STMicroelectronics ADR (NYSE: STM) Aug. 21, 2020, $35 call (STM200821C00035000) with a $0.60 limit or better; for the day.
  • Sell-To-Close the Vale S.A. ADR (NYSE: VALE) Aug. 21, 2020, $12 call (VALE200821C00012000) at the market.

Right now, our open positions are:

  • Nordic Amer Tankers (NYSE: NAT) Oct. 16, 2020, $5 call (NAT201016C00005000)
  • China Mobile LTD ADR (NYSE: CHL) Aug. 21, 2020, $40 call (CHL200821C00040000)

Now we wait and let the market come to us.

And I’ll be keeping you updated every step of the way.

After-Action Report

STMicroelectronics ADR (NYSE: STM) Aug. 21, 2020, $35 call (STM200821C00035000)

Date: July 13, 2020

Reason: Our system spiked on sure bet activity after $5.5 million in notional value was placed, betting shares would pop higher in the coming days.

Outcome: 33% gain!

Notes: We executed this perfectly. This is not only a quick profit but a lesson why we must take our profits when we earn the right. Shares barely moved on Tuesday, but implied volatility increased, which made our options increase in price. Since our exit, those options have been flat. It’s always best to lock in profits because we can always get back in at better prices.  

Novo Nordisk A/S ADR (NYSE: NVO) July 17, 2020, $72.50 call (NVO200717C00072500)

Date: June 22, 2020

Reason: Our system spiked on sure bet activity after $26.9 million in notional value was just placed, betting shares will soar higher in the coming days.

Outcome: Expired worthless.

Notes: We took our shot, but this didn’t play out as we anticipated. Loses will happen, but Keep in mind, though, that taking a 100% loss on a cheap option trade is often preferable to taking a smaller percentage loss on a stock trade. And the result – even a 100% loss – will have you better off than the equivalent stock trade. Another benefit of a conservative options strategy is that it leaves capital available to be more strategic.

Vale S.A. ADR (NYSE: VALE) Aug. 21, 2020, $12 call (VALE200821C00012000)

Date: June 29, 2020

Reason: Our system spiked on sure bet activity after 6.7 million in notional value was placed, betting shares would pop higher in the coming days.

Outcome: 136% gain!

Notes: We executed this perfectly. We earned the right to take profits and we sold when shares ripped higher. We locked in a great triple-digit gain! 

GOODYEAR Tire & Rubber Co. (NASDAQ: GT) July 17, 2020, $5 put (GT200717P00005000)

Date: April 21, 2020

Reason: Our system spiked on sure bet activity betting shares would pop higher in the coming days.

Outcome: Expired worthless.

Notes: We took our shot, but this didn’t play out as we anticipated. Loses will happen, but Keep in mind, though, that taking a 100% loss on a cheap option trade is often preferable to taking a smaller percentage loss on a stock trade. And the result – even a 100% loss – will have you better off than the equivalent stock trade. Another benefit of a conservative options strategy is that it leaves capital available to be more strategic.

I’m looking forward to answering your most pressing questions this Wednesday.

If you want yours included, send yours now to [email protected].

Have a great weekend and I’ll have a new trade for you on Monday.

To your wealth, freedom, and 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%