Storm Clouds Ahead — Here's What to Do

July 30, 2021

Dear Trader

They say the calm is before the storm...

And this week's price action was pretty calm as the S&P 500 and Nasdaq 100 tiptoe higher to new all-time highs

Underneath the hood, I’m seeing some divergences along with some more fear headlines and concerning economic data. 

It’s a head-scratcher, but it reminds me of when I was back on the trading floor during the summer months.

On Fridays the trading pits would thin out after the market opened, with traders heading out to start the weekend off early.

Bottom line — The market isn’t concerned about those issues right now, but that can quickly change as we head into August. 

Now, the CBOE Volatility Index (VIX), aka the “fear” index, is at 18.40 above our key 15 level.

Either we see wider price swings or volatility drop lower. 

But that pullback could be more than 10%, so buckle up. 

Now let’s talk shop.

Portfolio Update

Today, this position will expire.

  • VIAC July 30, 2021, $44/$47 call spread

Unfortunately, we don’t have more time for this 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, 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.

Here’s a recap of what we did this week.

On Monday:

Buy-to-open the CSCO Aug 6th, 2021, $56/57 call spread

On Tuesday:

Sell-to-close the SNOW Aug 20th, 2021, $275/285 call spread

On Wednesday:

Buy-to-open the FCX September 17, 2021, $38/$41 call spread

On Thursday:

No action

On Friday:

No action

Right now, we’re holding:

  • EDU Aug, 2021, $10/$12.50 call spread
  • CVS Aug 6th, 2021, $81.50/78.50 put spread
  • FCX September 17, 2021, $38/$41 call spread
  • CSCO Aug 6th, 2021, $56/57 call spread

Joshua’s Journal

This is my journal which is a debrief 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.

SNOW Aug 20th, 2021, $275/285 call spread

Outcome: 45% gain.

Notes: We executed this perfectly for this position.

VIAC July 30, 2021, $44/$47 call spread

Outcome: Expired worthless.

Notes: After our system triggered the activity, I thought we could see some short covering. This was a dog and didn’t work out. .

Now it’s time to head to the pool with a fresh jalapeno margarita - TGIF! 

I'll have a new trade for us 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%