Markets Revert - Options Expiring Today

February 5, 2021

It’s never been a better time to be in the markets.

The market action behind last week’s crazy short squeeze frenzy was a spectacle, but it’s important to focus on price and signals, NOT headlines and politics.

The unfortunate aspect of the GameStonk frenzy is that while Reddit traders were able to get a few hedge funds on the ropes, they got too arrogant.

Now, a lot of these traders who had great profits, now have a sick feeling in their stomach.

Even worse, they’ve become more jaded towards the markets. 

I wrote a short open letter to the WallStBets group, but in short this is my point.

The reality is that the stock market is an ocean.

They are sharks and we are pilot fish.

That means they are only looking for the big kill, while small opportunities are left alone.

The little guy can generate bigger returns themselves if they can understand this.

Empowering more to become individual, independent investors will benefit us more in the long run.

It will help us appeal current or upcoming rules and regulations.

For instance, we must end the PDT rule.

At the end of the day, we all play an important role in the capital markets.

Don't let this moment go to waste because you can control your financial future, by being strategic and knowing our edge.

Now, The CBOE Volatility Index (VIX), aka the “fear” index, is still above our key 15 levels, trading at 21.

But, last week we were at 3, which is a drop of 35%.

Trading options can be fun, but the challenging aspect of options is getting caught in these white washes as we did.

Now let’s talk shop.

Portfolio Update

Luckily, we were able to close the week out on a high note with putting two winning trades on the board.

Unfortunately, it will be a little soured by one of our other positions expiring worthless.

Schlumberger Limited (NYSE: SLB) February 5, 2021, $26.50 call (SLB210205C00026500)

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

There’s nothing that you need to do, and they will be removed from your account over the weekend.

Taking losses isn’t fun and can be painful, but without the bitter, the sweet isn’t as sweet.

But remember…

The sweet part is making money and losses are part of the process.

Our limited risk options allow us to trade profit opportunities with greater flexibility — and the potential for much higher potential gains than buying stocks outright.

On Monday:

Buy-To-Open the Brightcove Inc. (NASDAQ: BCOV) March 19, 2021, $20 call (BCOV210319C00020000) up to $0.95 per contract or better, for the day.

On Wednesday:

Buy-To-Open the The Kroger Co. (NYSE: KR) March 19, 2021, $38 call (KR210319C00038000) up to $0.54 per contract or better, for the day.

On Friday:

Sell-To-Close the Amer Axle & Manufacturing (NYSE: AXL) April 16, 2021, $13 call (AXL210416C00013000) at the market.

Sell-To-Close the Brightcove Inc. (NASDAQ: BCOV) March 19, 2021, $20 call (BCOV210319C00020000) at the market.

Right now, we’re holding:

  • América Móvil, S.A.B. de C.V.  (NYSE: AMX) February 19, 2021, $16 call (AMX210219C00016000)

  • GOGO Inc. (NASDAQ: GOGO) March 19, 2021, $20 call (GOGO210319C00020000)

  • Kroger Co. (NYSE: KR) March 19, 2021, $38 call (KR210319C00038000)

After-Action Report

This is our debriefing of every trade closed or expired to analyze what happened, why it happened and how it can be done better — like what the military uses after missions.

Amer Axle & Manufacturing (NYSE: AXL) April 16, 2021, $13 call (AXL210416C00013000)

Date: January 27, 2021

Reason: Our system triggered a buy alert after bullish call buying positioned a new $1.4 million new money bet in April expiration, betting prices would pop higher.

Outcome: We exited for a potential 22% gain.

Notes: We traded this the right way. We followed the signal and then sold into today’s move. Now, it’s on to the next trade.

Brightcove Inc. (NASDAQ: BCOV) March 19, 2021, $20 call (BCOV210319C00020000)

Date: February 1, 2021

Reason: Our system triggered a buy alert after call buying triggered after $2.2 million in New Money hit the tape. This accounted for an 8,500% surge in new call options traded

Outcome: We exited for a potential 22% gain.

Notes: We traded this the right way. We followed the signal and then sold into today’s move. Now, it’s on to the next trade. Unfortunately, the drop in volatility from Monday to today was 20 points, which was 50 cents in premium. 

Schlumberger Limited (NYSE: SLB) February 5, 2021, $26.50 call (SLB210205C00026500)

Date: January 19, 2021

Reason: Our system triggered a buy alert after call buying triggered after $$20 million New Money bet just hit the tape. This accounted for an 8,400% surge in new call options traded.

Outcome: This expired worthless.

Notes: We took our shot and it didn’t hit our profit target. Unfortunately, that’s how it goes sometimes. Shares finally got legs and ripped higher the last few days, but it was already too late.

Let’s keep focused, not panic and let the market come to us.

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

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%