Q&A - Bringing Home The Bacon

June 3, 2020

The broad markets continue to climb higher… regardless of what is being covered by mainstream media.

This recovery has benefited you with us closing out two winning positions this week.

Our Tyson Foods Inc (NYSE: TSN) June 5, 2020, $65 call was looking good until negative headlines crossed the wire. 

We have two days to see what happens, but this is looking to expire worthless on Friday.

Your Questions, Answered!

The mailbag is full, so let’s get to your most pressing questions today.

Hi Joshua,

I’m excited to be a new club member of your program.

Is your indicator always an entry signal? What about when the new money exits a trade?

Our Tyson Foods Inc (NYSE: TSN) June 5, 2020, $65 calls are down. Would you add more?

What are your exit criteria?

-George L.

I’m excited to have you part of the club! 

To your first question, both. Thanks to my system, we can identify if certain options were bought or sold, and if they are opening.

The system is like an electronic eye monitoring the millions of transactions every day. 

It’s like what a high-frequency firm uses to compete on order flow as a market maker.

I’m focused on the multitude, intent, and time-frame.

My system follows large new money positions being opened.

This isn’t unusual because unusual is very broad. 

But, large new positions opened in real-time carries the belief that the person behind it are confident prices will go higher. 

If they don't they lose the whole investment.

Likewise, when we see closing option transactions, that is a great sign the move is over.

On your question about our TSN calls — because we only have a few days till expiration, it doesn’t make sense. 

We have so many plays that will come at us, it doesn’t make sense to keep throwing money at something this short-term. 

That is the benefit of using options: We take a small bet that can turn into huge gains.

We took a cheap shot and now we let it play out.

Finally, when it comes to exiting a position, we always take profits into strength. Sometimes we get prices that open much higher and create the triple-digit returns. Other times we get intraday moves higher that we sell into. 

I’ll always keep you up to date and send you an alert when it’s time to exit a trade.

Let’s jump into the next question in the queue:

Hi Joshua,

What if a trader is buying calls or puts to hedge against a stock position?

-Chip T.

My system checks the equity markets for block stock trades that may have executed at the same time.

If we see blocks of stock tied, it could mean a stock was swapped out for calls or could be a nondirectional play.

Because there are more unknowns with that, the system doesn’t consider that activity.

Here’s the next question:

I would like to understand what the next step that I will be taking on my purchase of Teck Resources (TECK) options looks like?

A. Will I be receiving an email on the next move?

B. What will be my financial obligations, if any?

C. What is the effect if I am “out of the money” or “in the money”?

I have read your information, but this is not covered.

Thanks! -William N.

Yes, I provide email and text alerts on getting in the trade and how to exactly get out. 

You’re never left wondering about a position and how to manage it. 

And don’t worry — when it is time to sell, I will shoot you an email alert.

If a position is due to expire “out of the money” and nothing has to be done. It will be automatically wiped from your account come Monday morning.

The final piece of reader mail for today:

Often my positions have been red after buying, why is that? - John G.

With how we trade options, we’re going often have red on our screen while we wait for trades to develop.

These are supercharged instruments. That’s why they can quickly go from being down to big gainers.

Patience and persistence are key. I promise to keep a close eye on all our positions and will let you know when you have to take action.

With that said, I look forward to answering more next week. 

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
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%