Update: Closing The Week In The Green

May 22, 2020

Happy Friday!

We’re heading into a 3-day weekend, but it feels great with putting a winner on the board. 

Broad markets started out with a bang Monday morning after positive headlines from Monderna’s phase I study for a coronavirus vaccine candidate.

That pop higher allowed you to close out an overnight double-digit profit in our Snap Inc (NYSE: SNAP) May 29, 2020, $18.50 call (SNAP200529C00018500).

Since that move, markets took a break going into an extended weekend. 

Unfortunately, layoffs continue with another 2.5 million reported this week. 

That brings the total to 38 million Americans without work.

It’s sad to hear how our fellow Americans are struggling right now, but we will rebuild. 

The fear gauge for the S&P 500, known as the CBOE Market Volatility Index (VIX) is holding at 28. 

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

Volatility creates opportunity, but it’s also why timing and managing our winners are essential to keeping our profits.

Portfolio Update

On Monday: 

  • Sell-to-close Snap Inc (NYSE: SNAP) May 29, 2020, $18.50 call (SNAP200529C00018500) at market.
  • Buy-to-open Teck Resources Limited (NYSE: TECK) June 19, 2020, $10 call (TECK200619C00010000) up to $0.85 per contract or better, for the day.

Right now, our open positions are:

  • Teck Resources Limited (NYSE: TECK) June 19, 2020, $10 call (TECK200619C00010000) 
  • Virgin Galactic Holdings, Inc. (NYSE: SPCE) May 29, 2020, $25 call (SPCE200529C00025000)
  • GOODYEAR Tire & Rubber Co. (NASDAQ: GT) July 17, 2020, $5 put (GT200717P00005000)

After-Action Report

Snap Inc (NYSE: SNAP) May 29, 2020, $18.50 call 

Date: May 15, 2020

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

Outcome: 96% gain!

Notes: We executed this perfectly. This is not only a quick profit but a lesson why we must take our profits when we earn the right. When playing short-dated options, it’s critical to act fast. Prices of the underlying sold off on that Monday pop and closed on the lows. On Wednesday, the underlying rebounded and closed at those same levels. But the option price wasn’t the same. That’s because of time and volatility decay. Every financial instrument is different and can’t be traded the same.

As I mentioned, Wednesday will become our Mail Bag day. 

This is the day I will dedicate myself to answering your most pressing questions. 

We’ve already started receiving some questions for next week, but make sure you send yours now to [email protected]

I'll do my best to include it in the first edition of our Mail Bag series.

Your privacy is important to us.

I will never reveal your full name when answering questions or sharing your feedback.

Have a great long 3-day weekend.

I’ll have a new trade for you on Tuesday morning.

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%