The September slump continues for stocks.
We saw a snapback rally to start the week, but stocks are losing their footing in today’s session.
It feels good locking in those gains of 250% in TSM and MLCO and why it’s important to manage our winners.
We always keep an eye on volatility, and I’ve mentioned many times how unusual it’s been to see volatility so high despite stocks soaring higher.
Market winds are shifting with the FOMO panic buying exhausted.
Now, the fear gauge for the S&P 500, known as the CBOE Market Volatility Index (VIX) is holding at 29.
That means stocks will continue to see two-sided markets we’ve seen in the last two weeks.
Which is a normal market environment with the amount of uncertainty.
Right now, we weather the choppiness and stay patient.
Because as we saw how quick stocks dropped lower, they can quickly snapback and race higher.
- Buy-To-Open the Vonage HLDGS Corp. (NASDAQ: VG) Dec. 18, 2020, $11 call (VG201218C00011000) up to $1.00 per contract or better, for the day.
Right now, we’re holding:
- Nordic Amer Tankers (NYSE: NAT) Oct. 16, 2020, $5 call (NAT201016C00005000
- Melco Resorts & Entertainment (NASDAQ: MLCO) Oct. 16, 2020, $20 call (MLCO201016C00020000) - 50%
- Regions Financial Corp (NYSE: RF) Oct. 16, 2020, $12 call (RF201016C00012000)
- Vonage HLDGS Corp. (NASDAQ: VG) Dec. 18, 2020, $11 call (VG201218C00011000)
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.
“When I went to my online brokerage platform and placed my buy order on a few recent trades, it came up with a message saying, ‘Please note that you have selected a weekly option with a non-standard expiration date.’ What does that mean?” - Larry P.
That is confusing for most traders.
Here's a little history to help you understand what that means.
Back in 1973, the Chicago Board Options Exchange (CBOE) introduced the standardized option contract.
These options contracts were monthly and expired on the same day of each month.
The expiration was on the Saturday after the third Friday of each month.
Now, even though stocks don't trade on Saturday, that was to provide enough time for the clearing firm.
But back in 2005, the CBOE introduced a new class of options to give traders more flexibility — weekly options.
They operate much like monthly options but have various time frames and don’t expire on the third Friday of the month.
Depending on the stock you’re looking at, you could see options with up to four expiration dates in the same month!
That’s what your broker meant by “non-standard.” It’s simply because it was a weekly option instead of a traditional monthly option.
Most of the time, we usually trade monthly standardized options.
It makes it easier to manage our positions.
But in some instances, weekly options do make for a better opportunity and I will recommend them.
So when you see that message, it means that its expiration date will be different than a standardized contract.
Don’t worry though, I’m on top of every position and I’ll never leave you wondering what to do next.
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]
Talk with you on Friday.
Joshua M. Belanger