Hello Pit Crazies,
Sometimes stocks drive me nuts.
I think they have great prospects and are going up …
But the timing is all wrong.
What I don't want to do is confuse an investment for a trade.That will turn one problem into two.
Is that a problem you have?
Read on and we can see how to fix it …
I have a stock in the PowerMoves Portfolio with Frank Gregory, Taiwan Semiconductor (Ticker: TSM), that twice looked poised to break out above $120 — and it has failed both times.
I managed to salvage some dollars the first trip and I rolled-and-sold to a higher strike looking for the breakout that never came.
I do like TSM as a long term investment, around $100, as the company holds a lot of the chip-making capacity.
But at this point it is not a good short-term trade because, quite simply, it’s not making me money.
For that reason, I’m out …
… for now.
There will be other opportunities.
The Gold Trade
I expect gold to get exciting next week, which reminds me of my recent trades with Bill Griffo
Which have also been kind of problematic!
(And here’s a question to answer in the comments: do you consider gold an investment or a trade?)
I’m still long my SPDR Gold Trust (Ticker: GLD) July 16 180-strike calls with UVXY July 16 25-strike puts.
Both sides are losing — but we have not hit Jun 28 yet, which is when new rule changes in Europe could cause all sorts of global movement.
Part of the trade plan was to wait, and the UVXY puts were supposed to pay for the waiting.
All was well until the Fed got hawkish last week and everything went to heck.
If I can close the UVXY puts for anything close to what I paid for them, I will, since the plan went awry.
During a recent Volatility Edge presentation with Bill, I suggested some VIX call spreads or call flies …
They started to jump in value very quickly, so I’m confident that if the Digital Currency Arms Race heats up, VIX upside will pay.
Remember: If all else fails, make sure trade sizing is right. Don’t let one loss be more than you can make in your average wins.
Power Moves Portfolio w/ Frank Gregory
Option Pit DC and Wall Street insider Frank Gregory and I run a portfolio approach to trading options with stocks that have good long-term prospects based on Frank’s K Street knowledge and my options expertise.
The live trade log is here, and I’ll have a full recap for you every Wednesday.
Pro Trading Room:
The Pro Room is Option Pit’s live access to Mark and myself during trading hours. Our Pro students post trade ideas with Mark and me during the entire trading session.
An idea from around the room:
- More Gold! I added a long GLD Aug. 20 175-/190-strike call spread for $1.12 and some puts to hedge. Very low decay out to August.
Option Pit CEO Mark Sebastian uses the Robinhood Gamma Radar to find order flow in active names.
- Mark added a squeeze play in ContextLogic (Ticker: WISH) on Friday, buying June 25 12-strike calls and closed them Monday for 105% gain. Pretty nice.
- Mark also owns calls in ExxonMobil (Ticker: XOM) and Ford (Ticker: F) that look ready to roll.
The Trading Legion is an intermediate-level education and a long strangle trading vehicle. The goal is to teach students the best times to buy options.
- My long term General Electric (Ticker: GE) position closed Friday with a total 50% gain.
- Fastly Inc (Ticker: FSLY) long strangle was up about 10% on Friday and I did not close any of the calls. Perhaps I could have closed, but FSLY has held up very well in this market turbulence, so I will stick with my 1 week plan. $70 is my target price to close my calls.
- I own some legacy July 02 puts in ARKK Innovation ETF (Ticker: ARKK) that might have a second chance, but ARKK is looking very strong lately.
Volatility Edge/Volatility Trading Club:
The Option Pit VIX Light is still red, and the Cboe Volatility Index (Ticker: VIX) broke 20 going south with huge drops in implied volatility in the major indexes. Usually a drop like that precedes even bigger drops in VIX.
SPX rallied and VIX imploded in very normal market actions.
For the Volatility Trading Club:
- A new idea ws buying the iPath Series B S&P 500 VIX Short-Term Futures ETN (Ticker: VXX) June 25/July 09 30-strike put spreads for $.85 with a call hedge. VXX crashed and was able to close the short puts on the implied volatility drop for a 50% gain. That was nice.
Remember, a lot of vol strategies I use are market neutral. That means whether SPX or VIX go up or down, the positions still make money. This is a technique you can learn in the Volatility Trading Club and Volatility Edge!
To Your Trading Success,