No Trade This Week — Here’s What’s In Play
It’s going to be one of those weeks, folks.
One of those weeks where the market forces all collide in a way that results in no new trades.
For one, we are at the front end of earnings season. As of July 22, only 21% of S&P 500 companies have reported results, which means the bulk of stocks are scheduled to report between now and August 19 — the next major expiration date for options.
Of those companies that gave us ITV “buy” signals and have already reported earnings, none are offering high enough premiums to justify the risk of selling the option.
For example, I’m looking at puts on three different stocks in the Financials sector (one of the first groups to report) that also have “buy” signals and meet our safety criteria… and all three options are offering only $20 for contracts that would cost us between $1,500 – $2,000 on margin.
To reach a contract that would offer a worthwhile premium, we’d have to sacrifice our safety metric. That usually means picking a strike price that’s only slightly below the stock’s current prices, which increases the likelihood that we’ll be assigned shares. And even though I don’t mind taking assignment of certain stocks, I only want to do so at levels where we’re getting the stock at a nice bargain — and that’s not what we’re seeing today.
Finally, we have today’s meeting of the Federal Open Market Committee. When Fed Chair Jerome Powell takes the mic at 2:30 p.m. Eastern, we’ll hopefully learn more about what we can expect for the rest of the year… and whether investors believe the Fed will achieve the “soft landing” it’s been taking about.
Until then, all we have is uncertainty, and that’s not a place we want to trade from.
Of course, I’ll be closely following Powell’s press conference and what it means for the ongoing battle with inflation… as well as for our portfolio.
On the other hand, if you are looking for a new way to enhance the way you trade, then I would recommend the strategy we use in our premium newsletter, Income Trader.
In short, my subscribers and I use a conservative put-selling strategy to generate extra income in the market. We’re averaging a 90% win-rate on our trades — a level of success I’d challenge you to find with any other market strategy.
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