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Volatility Equals Opportunity!

Posted July 09, 2021

Alan Knuckman

By Alan Knuckman

Volatility Equals Opportunity!

The market experienced a little pullback yesterday following about two weeks of new highs in the major averages. But I'm not sweating this action at all...

Why?

Because, in my world, volatility equals opportunity!

Every time in history that the market has experienced a sell off, it has rallied and gained back those losses. I feel pretty confident about those odds...

So when the market sees some downward action, I see opportunities to buy!

Plus, it's all about strategy and money management. I'm not in the business of buying stocks and holding for years. I buy limited risk, in-the-money call options with enough time left to take advantage of the bullish momentum.

This strategy lets a modest move in the stock generate outsized returns on the options, giving us 50%, 75%, and even 100%+ returns in a fraction of the time if you just owned shares of the stock!

How long would you have to hold a stock for a 50% return? The answer is too long!

So don’t let the talking heads of financial media get to you, take a deep breath and trust in your strategy.

There will always be new opportunities around the corner!

Keep it In the Money,

Alan Knuckman

Alan Knuckman
Editor, In-The-Money
AskAlan@StPaulResearch.com

Trading Tip of The Day: A Snapshot of The Wreckage

Greg GuenthnerThe bears took the market to the woodshed yesterday morning. The averages took a beating and the media is quickly blaming reopening anxieties and COVID variants. But the market has been shaky for weeks — it’s just that no one who follows the indexes had noticed!

Due to the ugly chop, I think it’s important to be more conservative in your trading.

Trading small and being selective during these times are the keys to not churning your account. There will always be great trading stretches, followed by weeks (sometimes months) of more difficult conditions. That’s just how the market works. You have to adjust as best as you can, keep to your strategy, and plow through.

Hopefully, a big flush this month will actually help things get back on track. I don’t mind when the market goes down. In fact, I prefer a hard reset to the mixed, choppy action forced on us recently. I’d much rather sit on the sidelines for a few days or a week or two and wait for a strong signal, instead of enduring a bunch of bad signals and trades that go nowhere, or suddenly reverse.

Happy Trading,

Greg Guenthner

Greg Guenthner
Analyst, In-The-Money
AskGreg@StPaulResearch.com

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