Markets swing back and forth due to a tweet or some rumor.
One day trade talks are breaking down and the following day the trade talks are back on.
Normally in uncertain times like these, investors ditch the risky sectors and purchase safer investments.
This is what’s known as a "flight to quality."
What we’re seeing here, however, is the last leg of a bull run, with money sloshing back and forth.
This sloshing action isn’t a flight to quality and just chases the newswire.
Despite this, the S&P 500 and NASDAQ-100 are less than 2% from recent all-time highs.
The fear gauge for the S&P 500, known as the CBOE Market Volatility Index (VIX), continues to hang above our key level at 15 — which means that the market is still cautious.
This rally could lead prices to run into resistance above as we head into the last earnings season for 2019 — set to kick off next week.
No matter what happens, the next few months are going to be exciting.
One reason is that companies that are looking to grow via an acquisition and have cash will want to deploy that by year-end.
In most cases, smart money is ahead of that news, and we’re able to follow alongside that.
That’s why it’s important we continue to be engaged and keep swinging.
Let’s talk about the newest position this week.
On Tuesday, we bought to open Cameco Corp (NYSE: CCJ) November 1, 2019, $9.50 calls up to $0.30 per contract.
We also practiced sound position management and sold to close our Goodyear Tire & Rubber Co (NASDAQ: GT) November 1, 2019, $15 calls at $0.20 per contract.
Today, we sold to close our Emerson Electric Co. (NYSE: EMR) November 15, 2019, $67.5 calls at $2.25 per contract.
Right now we’re holding:
- Toll Brothers Inc (NYSE: TOL) October 18, 2019, $41 calls.
- Barrick Gold Corp (NYSE: GOLD) October 18, 2019, $22 calls.
- Cameco Corp (NYSE: CCJ) November 1, 2019, $9.50 calls.
Emerson Electric Co. (NYSE: EMR) November 15, 2019, $67.5 calls at $2.25 per contract.
- Date: October 1, 2019
- Reason: Our Hot Money Tracker spotted a large bullish bet placed in the November call option strike, which would pay off if prices increased in the coming weeks. Hot Money was also selling put option contracts in the December strike, which was another bullish bet on prices to go higher.
- Outcome: Closed for a 50% gain!
- Improvements: It was a bumpy ride, but prices finally went in our direction, and we sold into strength as we should.
Goodyear Tire & Rubber Co (NASDAQ: GT) November 1, 2019, $15 calls
- Date: September 24, 2019
- Reason: Our Hot Money Tracker had several alerts before our entry with very large bullish bets placed in the call options in October and November expirations.
- Outcome: We exited at 63% loss.
- Improvements: The following day after we entered, our calls had a 50% profit. By the time we had the alert ready to send out, prices drifted back. The recent choppiness put weight on how shares were trading. On Tuesday, we dropped below a key level, which promoted the reason for our exit. However, we see shares roar right back.The market swings have us playing on our heels, and when we’ve let something play out, it hasn’t worked in our favor. When we don’t, it does. That’s why it’s important to stick to a system and not focus on market action.
As always, keep sending your questions and feedback to [email protected]
My team and I will have a new trade for you on Tuesday.
To your wealth, freedom and options!