Spotlight Trade of the Week for the Week of March 9th

Posted in: Options Trading, Trade Of The Week, Trading Article

This weeks (March 9) Spotlight Trade of the Week is another Options trading opportunity and features a long play in AT&T.

It’s actually a brand new trade plan for the Spotlight Power Trader that was just published to the Owner’s Club private website where members get full access to the details (contact us for club details)

For those of you thinking about how an Options trade works, think of the underlying stock movement guide the Options trade.  You can learn more about Options in our post: Why Should You Choose Options Trading.

Trade Setup

 

Options Trade Details

If the price gets to $37.66, we want to have a long position and to do so:

  • Buy June 37 calls
  • Other choices are June 36 calls, May 36 or 37 calls
  • Our first objective is for T to hit 38.56.  If that happens, reduce the risk on your position by moving your stop to 37.26
  • At 39.23, exit 25% of your position.  We will continue to trail the position upward, locking in more profit as the trade develops.
  • At 43.43, exit another 25%
  • At 45.11, exit another 25%
  • We will exit the remainder with our trailing stop

I chose the June 37 calls because if this trade loses, I’ll be able to recapture more of the premium if I stop out of the position.  Also, if the trade takes longer than normal, time decay won’t be as much of an issue.

June 36 calls will even do a better job at this but they cost more than the 37 calls.

 

Getting In Sync With The Trade

The original entry of this trade printed at 37.23 on 2/13.  We are going to get in sync with this trade using an adjusted price entry to get above near term resistance as revealed by the current price action.

Aggressive trades can scale in at 37.23 for a lower options price but we prefer to ‘buy some insurance’ by waiting for the price to give us additional confirmation by breaking through the near term resistance prior to entering this trade.

We will need to give up a little of this trade’s potential for the additional price action confirmation but there is plenty of room in this trade for a significant profit to make that possible.

This plan has posted a very strong win rate and profit factor over the last 10 years with this particular Spotlight Power Trader trade plan.  The results are based on 4 single shares of stock, each exiting the trade in the manner described above.

Using Options will provide a much larger percentage gain combined with great risk control.

I will update this trade as it develops.


Spotlight Trades of the Week Recaps:

Our USDCAD trade of Feb 18th, is moving ahead nicely.  It has already hit its first objective, the money management level and stops should have been moved to 1.2669, locking in about 30 pips of profit.

This trade is still active and there is nothing new other than to let it continue to do its thing.

3/10/18 Update to our USO trade

Our short on the ETF, USO, buying May 13 puts actually just triggered in when USO hit 12.09 on 3/8.  This trade is active and still developing.  It was originally called on March 4th.

  • There is a possible Stop and Reverse that has given us a setup to go long.
  • If USO gets to 12.66, close out of your puts position.  This will cut the loss in half, the original stop being at 13.21
  • You can buy May or June 12 calls.
  • If this happens, place your stop at 121.07.  We’ll target 13.10, 13.30, and 14.50
  • This is a possible scenario.  If the market heads lower, we will continue to hold our original put position and this stop and reversal will be cancelled.  I will update accordingly so check back often.
  • See USO Update Here

3/23/18 Update; This trade hit its stop today for a full loss, – 2.76.  All positions should be closed.  Options should be sold to recapture the remaining premium.  That’s why I like to use options with plenty of time.  When a trade loses, you can close out the option and get back a larger percentage of premium.

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