The market has traded in a tight range to start the shortened week following Monday’s day off as the bulls and bears feel each other out. February has seen extreme daily triple-digit swings in the Dow and today’s action is just a pause in what should continue to be a volatile month. Evidence of this is a rising VIX in a slightly up market.
Although economic news will be important this week, we looked at nearly 50 charts on possible option earnings trades. Narrowing this down to 20 to sift out a Watch List was challenging but getting it down to 10 possible money making trades was the fun part. If you haven’t logged into the Members Area to study the charts, do so now as it will make you a better trader.
This is also options expiration week as the February options expire on Friday. This means the February calls and puts are “cheap” as the premiums were zapped following a 3-day weekend. The “fluff” in some of the overpriced options have come down but the high-beta stocks still sport expensive options and make trading earnings on some of these stocks more riskier.
Our portfolio is light so we do have room for 1 or 2 earnings trades this week but we also have some candidates for March and April on stocks that have already been through the earnings cycle. This helps taking some of the volatility out of the trade as the companies have already their numbers and guided forward.
We also have a put option trade we are eyeballing on a stock near 52-week lows. Shares are currently just south of $46 following today’s 1.5% decline (or $0.75) and the 52-week low is just north of $44. We believe by April or May, this well-known company will warn of an earnings miss in April as they are losing customers hand-over-first.
We will try to do a video on the stock for those of you that have purchased our options trading course, How to Trade Options on Momentum Stocks, or upgraded to the 1-year special deal over the weekend. The response was overwhelming and thank you for the support. Remember, the options course is an $899 value and is yours at NO CHARGE if you upgrade to the 1-year deal with the coupon code we offered over the weekend. If you have not received your options trading course by now, after upgrading in December or January, please email our support team as all of them have shipped over the past 2 weeks.
As we make turn, the Dow is down a point to 16,153 while the S&P 500 is up 3 points to 1,841. The Nasdaq is higher by 28 points to 4,272 (another fresh 13-year high) while the Russell 2000 is surging a 12-pack to 1,161. The S&P 500 Volatility Index ($VIX, 13.99, up 0.42).
We have a New Trade we are getting into so we have to roll. We have also updated our current trades. Subscribers, check the Members Area for the action and stay locked-and-loaded into the close as we could have additional Trade Alerts.