Volatility is NOT Risk
Last week culminated in a nearly 1,000-point loss on the Dow on Friday. It was also the third week in a row that the S&P 500 lost at least 1%.
Among the reasons for last week’s selling were the prospect of a half-percentage point interest rate hike in May and downbeat earnings reports from retailers and health care companies.
I can understand why some of you may be nervous by the market’s recent gyrations. However, it’s important that traders, specifically option sellers, don’t confuse volatility with risk.
Repeat after me: Volatility is NOT risk.
Volatility is found in the short-term movements of a stock. Risk is found in the longer-term performance of a company and valuation of a stock.
As an option seller, you can use volatility to your advantage, as higher volatility translates into higher option prices.
This requires that you think longer term like an investor (i.e., selecting solid stocks to trade) while trading shorter term for cash.
That’s exactly what we do at Options Income Blueprint. Last week, we closed two winners on volatile stocks, booking $90 in cash and earning excellent rates of return.
With both trades, we were able to use volatility to our advantage. We collected outsized premiums upfront for the sale of the puts, which gave us the flexibility to close the positions early and still exceeded our annualized rate of return goal.
As I’ve said before, my goal is not to trade new names each week. It’s to make as much cash as possible.
March’s winners bring our year-to-date cash total to $1,296.
I’m happy with this outcome, especially during such a tough quarter
In the latest Options Income Blueprint Weekly Income Report, I discuss last week’s trades, take a closer look at volatility and risk, and review our recent position in The Trade Desk (TTD).
As we look for trade ideas, the U.S. government just handed over a potential big win for one industry. Will we see a boost to the clean energy stocks after the Senate voted to unlock nearly $370 billion this past weekend?
What does all of this mean for the future? Are the jobs reports good or bad?
Keep reading to find out the key levels for the S&P 500 and what reports are likely to move the markets this week.
We could see another strong month ahead for tech and there’s one symbol that you may want to add to your trading list.
Keep reading to learn more about the one symbol that could have a strong August.
As the markets remain relatively flat, theta decay is your friend this week so I thought I’d write about a trade that has been showing remarkable accuracy lately.
This one trade has a 90% accuracy rate. Keep reading to find out more.
It wasn’t too long ago that the market was reacting (or overreacting) to every piece of news that was published. Over the last month and a half, the markets have settled down some. That can be seen from the VIX (volatility index) which has been steadily decreasing since the mid-June market lows.
The Mediots Are At It Again
As we’ve explained over the last few months, it was likely that the U.S. economy would meet the ‘technical’ definition of a recession (two or more consecutive quarters of negative GDP).
It’s official, the Fed increased interest rates by 75 basis points for a second straight meeting. Inflation remains high, job growth is slowing, and consumer confidence is at historic lows.
Maybe that’s why investors are rushing toward dividend investing to protect their portfolios. With a recession likely on the horizon, if we’re not there already, and dividend payouts projected to increase throughout 2022, there are three quality companies you should consider for your portfolio.
What can learn from the major companies that reported earnings?
Alphabet (GOOG/L) released earnings and missed overall, but their ad revenue beat expectations so their stock went up after hours. Microsoft (MSFT) missed on cloud revenue and ad revenue and their stock went down. Great.
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