Stocks started off hot this week, but our mid-week gains have been hotter!
As you know, we closed out 200% and 50% winning trades yesterday in TSM and MLCO.
Right now, your newest position in RF is sitting in the green by 25% in two days.
Now, the fear gauge for the S&P 500, known as the CBOE Market Volatility Index (VIX) is holding at 25.
That means stocks will continue to buzz around, but as you’ve seen, be prepared for more fast profit opportunities.
This Friday is September options expiration and we do have two positions that will expire worthlessly.
But I’ll keep you updated on all of our next moves.
- Buy-To-Open the Taiwan Semiconductor ADR (NYSE: TSM) Oct. 2, 2020, $85 call (TSM201002C00085000) up to $1.15 per contract or better, for the day.
- Buy-To-Open the Regions Financial Corp (NYSE: RF) Oct. 16, 2020, $12 call (RF201016C00012000) up to $0.65 per contract or better, for the day.
- Sell-To-Close the Taiwan Semiconductor ADR (NYSE: TSM) Oct. 2, 2020, $85 call (TSM201002C00085000) at the market.
- Sell-To-Close 50% of the Melco Resorts & Entertainment (NASDAQ: MLCO) Oct. 16, 2020, $20 call (MLCO201016C00020000) at the market.
Right now, we’re holding:
- Nordic Amer Tankers (NYSE: NAT) Oct. 16, 2020, $5 call (NAT201016C00005000
- ANGI Homeservices Inc. (NASDAQ: ANGI) Sept. 18, 2020, $15 call (ANGI200918C00015000)
- Energy Transfer LP Unit (NYSE: ET) Sept. 18, 2020, $6.50 call (ET200918C00006500)
- Melco Resorts & Entertainment (NASDAQ: MLCO) Oct. 16, 2020, $20 call (MLCO201016C00020000) - 50%
- Regions Financial Corp (NYSE: RF) Oct. 16, 2020, $12 call (RF201016C00012000)
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.
“Yesterday, you recommended to only sell half of our MLCO Oct. call options. Why do you recommend selling half of our positions instead of selling them all?” - Brian J.
You'll often hear me say that making money if the fun part of trading...
But we have to earn the right to take our profit.
So, I'm always looking to see where we can lock in gains on our winning option trades.
It’s simple, it's so that we can take profits early and reduce risk.
Managing our profits are essential to being a successful options trader.
Yesterday, our MLCO call position was up 50% in 5 trading sessions.
With gains that fast, we need to manger our risk by locking in profits.
So why sell half of your position, and not close out the whole thing?
I don’t want you to miss out on more potential profits!
Since these contracts don't expire for another 30 trading days, it allowed us to hold on a bit longer.
Stocks and options move on momentum.
So, after you sell the first half of your position, if an options trade is moving higher in a strong uptrend, then there’s a good chance the option will continue trending up.
Of course, the opposite may happen, and the value could go down. But that’s another reason we sell half of the positions early.
No matter what happens you’ll lock-in gains on at least half of the trade.
Now, your broker won’t let you sell half of a single contract.
So, in order to take profits and let the other half ride, you'll look to buy contracts in pairs.
We’re not doing anything fancy here…
Simple, but smart money and risk management.
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