Does This Market Have You Locking In Profits Early, Too?
After booking seven winners last month and $263 in cash, we’ve closed two trades so far in June.
Both of these trades were early closeouts, but we exited the positions for different reasons.
We began trading the airline stocks again in Options Income Blueprint in April. This followed a two-year hiatus as the travel sector was decimated by the coronavirus pandemic.
But this year, airlines are benefitting from a surge in demand. Customers seem willing to pay higher and higher prices for tickets, with the consumer price index for airline tickets up 25% over the past year. That far outpaces the roughly 8% increase in the Consumer Price Index (CPI) over the same period.
Because airline stocks are volatile, I cautioned members that we would only be trading them opportunistically at this point, rather than looking to be caught up in any of the positions long term. Therefore, I am willing to close trades early for a smaller-than-usual profit or even at breakeven if necessary.
Including last week’s UAL trade, we’ve closed five successful positions on airline stocks – two on UAL and three on Delta Air Lines (DAL) – earning a combined $76 in cash. Our annualized rates of return on these positions ranged from 7% to 104%.
With the latest trade, our annualized return of 11% was below our 26% target rate of return. In a different market, we might have rolled the position out a week in an attempt to capture more income. But, as they say, no one ever went broke taking a profit.
With Starbucks, my decision to close early was motivated by two factors. The first was the fact that we could exit with a 38% return, which easily exceeded our 26% annualized return goal. The second reason was that I didn’t trust the market rally.
I still don’t. And with a Federal Reserve meeting looming next week, you can bet that we will be looking to lock in profits on as many trades as we can before then.
In the latest Options Income Weekly, I discuss last week’s trades and take a closer look at the decision to close positions early.
Just how correlated are consumer expectations with the reality of the market? Can this be used to predict where market prices will go?
Keep reading…
Then something happened in the market today and this one chart may be presenting a different side to the story. This chart pattern may be signaling the next leg down is right around the corner and now is the time to get ready.
Let’s look at a strategy you can use by selling stock options to potentially take advantage of a near-term bump in the ride-sharing companies.
Selling options for weekly premiums can be a good strategy if you know how to navigate the extreme peaks and valleys each week.
If you are an options trader and want to take on a little risk, I’ll show you an options trading strategy with a potential 55% gain by July 22, 2022.
With the Energy stocks beaten up so much last week, I wouldn’t be surprised if we see a little bump back up this week.
I have an idea for an Energy trade.
Get Today’s Trade Idea
We’re going to stick with point-and-figure charts today. The energy sector has been red hot but has lost some ground over the last few days. Oil and Gas companies could be negatively affected by a slowing global economy.
What is the Fed Doing?
In an effort to combat out-of-control inflation, the Fed is increasing interest rates to slow down the growth of the economy. The trick is to do so without causing a recession.
Zoom has become so part of our vernacular, that people use it as a verb. Sort of like how people ask for a Kleenex, even though that’s just a name brand of facial tissue. So if everyone is still Zooming, at home, at work, and at school, why has the stock been falling?
Keep reading to see if discretionary spending and the price of oil are correlated and if we can pick a market bottom.
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