August 1st, 2023
Winner After Winner with Speculative Stocks
When I reviewed our Options Income Weekly performance for the month of June, during which we closed out 12 winning trades and generated $683 in cash with just one contract sold, I noted that we were using the market’s bullish momentum to our advantage by trading growth stocks and taking fast profits when we had the chance.
I said at the time that we would continue to look for opportunities to trade names in the tech sector, as well as consumer discretionary and other areas where money is flowing.
And that’s exactly what we did in July. The broader market continued to climb, and we continued to book winner after winner on what most would consider to be speculative names.
Options Income Weekly members closed out eight winning trades in July, generating $281 in cash with just one contract sold.
As you can see, we averaged a 0.7% return per trade with an average holding time of less than four days.
We had a number of repeat winners in July, including three trades in a row on a new name for us: Rivian Automotive (RIVN). We’ve been booking fast profits and high rates of return on the maker of electric pickups.
We also closed two successful trades on Roku (ROKU), with the most recent marking our 20th winner in a row on the TV streaming platform operator since we began trading it back in late 2019.
Another stock we keep going back to is The Trade Desk (TTD), which specializes in real-time programmatic marketing automation technologies. We’ve closed 10 successful trades on the stock so far this year and 18 since we began trading it in Options Income Weekly back in early 2022. In total, we’ve generated $640 in cash with just one contract sold.
Finally, we closed out one more profitable trade on Crocs (CROX) in July, marking our seventh winner in a row on the footwear maker in 2023 and 13th since we began trading it in Options Income Weekly in October 2020. So far this year, we’ve generated $413 in cash from CROX with just one contract sold. Meanwhile, our average trade has returned 0.6% and our average holding time is just over six days.
As I mentioned above, most investors would consider these names to be speculative.
For instance, Rivian continues to report big losses and sits roughly 65% below its IPO price of $78 from November 2021. Yet, shares are ripping higher this year on renewed interest in EV stocks, as well as strong quarterly deliveries, a growing backlog of orders and positive analyst sentiment.
Or take Crocs, for example, which saw its stock lose nearly 15% of its value on Thursday after the company reported Q2 results. This was despite it reporting surprise earnings growth of 10.8% compared to the 9% decline analysts were expecting. Revenue also surpassed estimates, rising 11.2% year over year to a record $1.07 billion. Yet, shares sold off sharply when the company’s Q3 outlook came in light.
While the stock regained some ground on Friday, rising nearly 6%, the potential for such large intraday moves certainly makes CROX a speculative stock.
But with added volatility comes additional premium, which is what we’re looking to capture as option sellers. So, members can expect to be trading more names like this in the months ahead, including some new opportunities we are eyeing.
Managing Editor, Traders ReserveT