Options Free & Premium Section

Risk is Opportunity

January 18, 2024 by Sean McLaughlin

“The Iron Condor is a risky trade!”

This comment was shared today during my appearance on the Morning Show with JC and Strazza.

We were discussing this trade in $TSLA we put on yesterday.

Sure, this trade might have some risk in it.

Newsflash: ALL trades have risk. If there was no risk, there would be no potential reward!

An Iron Condor is a four-legged options spread consisting of equal amounts of short out–of-the-money puts and calls, and long further out-of-the-money puts and calls that protect the position and define the risk.

Here’s the PnL Graph for the $TSLA trade and this is a pretty common structure for an Iron Condor trade: [Read more…]

[Options] “Gimme Something Sloppy!”

January 17, 2024 by Sean McLaughlin

Look what we have here: a $VIX popping its head up to two-month highs.

Are investors getting a little spooked by the prospect of a tricky earnings season?

We’ll be able to figure all that out after the fact. In the meantime, we will use these elevated options premiums to help us ride out some portfolio profitability.

I asked my analysts to find me a big cap name that is trading sloppy.

And the one they came with is a widely followed mega-cap name that has been flopping around in a sideways choppy range which, coupled with upcoming earnings, is helping to juice options premiums.

Here’s everyone’s favorite EV car maker Tesla $TSLA: [Read more…]

A New Plan For Trades Ahead of Earnings

January 16, 2024 by Sean McLaughlin

One of the areas I’ve identified where I can improve my trading is in trade selection. Specifically, my trade avoidance.

Due to my early trading experience as a stock trader, it was ingrained in me during my formative trading years to avoid positioning in stocks that are about to announce earnings.

And for good reason.

Once a stock trade is on, our only real defense against punishing losses is to have a stop-loss order working. That’s fine if you trust yourself to always honor your mental stops. But for most of us mere mortals, the good-til-canceled stop-loss order is our best protection.

99% of the time, a stop-loss order works as intended. Sure, we might suffer a little slippage here and there. But it works like a charm in preventing disaster. Especially for intraday trades.

But for overnight holds, a stop-loss order has its limits. And these limits are fully exposed in the event of a binary news release – most notably earnings announcements. [Read more…]

[Options Premium] Adding a Little Short Exposure

January 12, 2024 by Sean McLaughlin

Don’t let today’s headline scare you. I’m still bullish overall.

But with the S&P500 still bumping its head against overhead resistance, it wouldn’t hurt to provide a little ballast for a mostly long portfolio here.

So with this in mind, I’m putting on a bearish trade in a stock that has not been participating in this bull market, and will likely continue to push lower as long as the broader indexes keep struggling here.

[Read more…]

[Options] A Hedge Against Spending

January 10, 2024 by Sean McLaughlin

Today’s trade is in a name that many American shoppers are familiar with.

You’ve probably seen TJ Maxx stores everywhere, frequently located in strip plazas throughout the suburbs. And there’s a good chance your family has dropped some loot in there, taking advantage of the deals they are famous for.

JC commented today that he’s invested in $TJX in his long-term account as a hedge for his wife’s spending at this store. I think many of us can relate.

But what’s got me most excited about this setup is the recent base just below $100, which would be an all-time high. Around here, we call that the hundred-dolla-roll, and it’s one of my favorite setups: [Read more…]

[Options Premium] Encino, Man

January 8, 2024 by Sean McLaughlin

Sorry if today’s blog title is a dated, obscure movie reference. I can’t help myself sometimes.

But today’s setup is no joke. We’ve got a stock that’s a little off the mainstream path, which makes me like it even more. Stocks like this, which few have heard of, can sometimes quietly move higher. And then this slowly draws more attention (and buyers) to it, which helps our position.

So let’s get to it. [Read more…]

[Options Premium] Snapback Rally

January 5, 2024 by Sean McLaughlin

I’m showing my age here, but I’ve never used the social media platform Snapchat. Nor do I have any plans to do so.

But I’ll happily trade options in the stock when there are favorable setups. And we have one now.

Let’s get right to it. [Read more…]

[Options] Catching Up To the Leaders

January 3, 2024 by Sean McLaughlin

Healthcare is an early leader out of the clubhouse to start the year. We’ve already seen some big moves in names like Merck, Amgen, and Lilly.

This is a sector rotation that makes sense to us. And for this reason, today’s trade is in a name we think will play catchup to these leaders.

But first, lets zoom out to observe this chart of $PFE, highlighting the stock sitting near a level that has acted as strong support for numerous times over the past decade: [Read more…]