The Deja-Vu Bear Trap

August 7, 2020

The march for new market highs continues, but we’re seeing the good old market 'tree shake'.

That is when the market shakes out the weak hands before making the next leg higher.

Yesterday, the Nasdaq hit a new all-time high while the S&P 500 is only 1% from achieving the same - so watch out above!

The fear gauge for the S&P 500, known as the CBOE Market Volatility Index (VIX) is holding at 24.

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

Patience and persistence are essential to keeping us on track.

Portfolio Update

You've continued to knock it out of the park with closing your 9th winning trade out of the last 11!

That means you've collected real-money gains of 349%.

I'm so happy for your success.

Trading is tough and not fun, but making money is fun!

Right now, we still have a few open positions that are sitting in the red, but don’t let that trick you.

We have limited risk options with a lot of upside potential, so we’re sitting tight and letting this play out. 

The only thing is that time is not on our side, but a quick move will cause these options from red to green quickly.

On Monday, we added our newest position:

  • Buy-To-Open the Cameco Corp. (NYSE: CCJ) Sept. 18, 2020, $12 call (CCJ200918C00012000) up to $0.35 per contract or better, for the day.

You then closed out this position:

  • Sell-To-Close the IQIYI INC ADR (NASDAQ: IQ) Aug. 28, 2020, $22 call (IQ200828C00022000) 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)
  • Box Inc. (NYSE: BOX) Aug. 21, 2020, $20 call (BOX200821C00020000)
  • Cameco Corp. (NYSE: CCJ) Sept. 18, 2020, $12 call (CCJ200918C00012000)

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

IQIYI INC ADR (NASDAQ: IQ) Aug. 28, 2020, $22 call

Date: July 27, 2020

Reason: Our system spiked on sure bet activity that these options would pop higher in the coming days.

Outcome: Closed for a 13% gain.

Notes: We played this exactly as we should with selling into strength. Shares moved higher the following day which left money on the table. But that is hindsight and it could have turned into a loser. Some readers are frustrated with leaving money on the table by taking profits too soon. It's better to get out early and avoid the ups and downs. It never hurts taking profits too soon. Any new money you make is more than the money you had. Managing risk is an essential piece of being successful. Anyone can put on a trade; it's how you manage it.

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%