Posted July 16, 2021
By Alan Knuckman
Make Time Work For You!
Years ago, I quit stocks and never looked back. I had found a new way to trade and fell in love with it...
I’m talking about options, of course!
That’s right, after I quit stocks I made the decision to go with options as my prefered trading vehicle... And I don't regret it one bit!
One of the reasons I love options so much, besides the HUGE profit potential compared to stocks, is that you can put a little extra money into a trade to buy yourself the extra time needed to be right.
This is more important than ever right now since huge melt-up moves are fewer and farther in between.
And if you’re using limit sell orders for profit targets, you’ve got a set it and forget it, lose no sleep strategy!
With options, a modest move in the underlying stock can create a BIG boom on the option.
So if you’re looking for stocks to trade options on, consider if there will be a bullish catalyst that’ll send the stock higher and choose your expiration date accordingly.
It’s usually a good idea to buy a little more time than you think you’ll need too...
All we’re looking for is some bullish momentum to carry our options to our profit target. We don't want to hang on forever, waiting months and months for a stock to reach double digit gains.
I call these kinds of plays lifestyle options and I think they’re a great way to trade!
Keep it In the Money,
Chart of The Day: A Devastating Dip
Stocks struggled on Wednesday and Thursday, that’s definitely no secret. The action was a particular kick in the teeth for swing traders…
It’s the same story: A few mega-caps are propping up the averages while the rest of the market suffers/chops along. On the surface, it looked like nothing happened Wednesday. The S&P and Dow finished in the green, while the Nasdaq gave up its early gains to finish down about 0.2%.
But many tech names and breakouts failed and moved sharply lower.
An extreme example is UPWK, a software stock I was looking at earlier this week.
UPWK broke out on Tuesday (and faded a little in the afternoon — usually not something anyone would worry too much about). But Wednesday was an absolute bloodbath. The stock couldn’t get its footing, the breakout failed, and it finished the day down 17%. No, that is not a typo — and no, there was no negative news dragging it down.
Just a devastating move if you’re attempting to trade these types of plays. Look at the volume bars at the bottom. Excitement going up, panic selling on the way down. A total reversal in price and sentiment in just two days...
This just goes to show that there’s no such thing as a conviction play in trading…
So stay safe out there, and stay smart!
Hopefully some of this chop subsides as we move out of the Summer months...