New Money Blazes for 500%-Plus Gains
Dear New Money Club Member,
Stocks are trading a little heavy today, an indication that the recent Pfizer and Moderna vaccine news hasn’t quite sustained the overall market buying frenzy.
That said, our recent performance in the last 10 days has been nothing short of remarkable. Our recent post-election trading has allowed us to close out our call options in Wells Fargo (NYSE: WFC) for a 263% gain, Murphy Oil (NYSE: MUR) for a 30% gain and Vale SA (NYSE: VALE) for another 226%.
Let’s continue to block out all the noise — additional stimulus, a global lockdown, the weakening dollar, a “dark winter,” etc. — so we can position ourselves to come out ahead.
Now, the CBOE Volatility Index (VIX), aka the “fear” index, is still above our key 15 levels, trading at 23. That means we may see stocks ping back and forth like a bowling ball hitting the bumpers. So, we need to be prepared to take swift action in the weeks ahead.
Remember, making money is fun! Make sure you take some of your gains and celebrate with your family.
And as a quick heads-up: If you haven’t already done so, drop me a line and tell me how you did on your recent trades. You can reach me at questions@newmoneycrew.com.
Portfolio Update
On Monday, we issued alerts to:
Sell to Close Murphy Oil Corp. (NYSE: MUR) Dec. 18, 2020, $10 calls (MUR201218C00010000) at the market.
Buy to Open Vale SA (NYSE: VALE) Nov. 27, 2020, $12 calls (VALE201127C00012000) up to $0.25 per contract or better, for the day.
And on Tuesday, we opted to:
Sell to Close Vale SA (NYSE: VALE) Nov. 27, 2020, $12 calls (VALE201127C00012000) at the market.
So right now, we’re holding:
- Hostess Brands Inc. (Nasdaq: TWNK) Dec. 18, 2020, $15 calls (TWNK201218C00015000).
- Sandstorm Gold Ltd. (NYSE: SAND) Jan. 15, 2021, $10 calls (SAND210115C00010000).
Let’s keep focused and let the market come to us. I’ll make sure to keep you updated every step of the way.
Your Questions, Answered!
The mailbag is full, so let’s get to your most pressing questions.
“Hi, Joshua,
I'd like to start entering more options trades of my own. Do you have training classes on options? What do you look for in the options that you recommend each week?” — Nick F.
That’s great to hear that you’re motivated to take the next step in your journey! I make trading options as easy as possible, but there are plenty of opportunities for you to branch out and leverage.
There are a few things I would stick to when trading short-term call options:
- Focus on options expiring in five to six weeks.
- Consider call options that are “in the money.”
- Use spreads.
- Target stocks with bullish momentum.
I always want to buy enough time for us to be right. So, we often stick with options that expire five to six weeks out. The extra couple of weeks provides a little more time for positions to develop.
Now, if you’re trading options on your own, I would also recommend looking at in-the-money options. These are options where the strike price of the option is below the current trading price of the stock. These options provide a buffer in case the underlying stock price drops during your trade. But the more “in the money” you go, the higher the premium will be. The best way to reduce that cost is to sell an out-of-the-money call against it.
Also, using a spread will give you a better opportunity for success, but the trade-off will be the overall return. And for short-term option plays, you should look at stocks that have some momentum behind them.
As always, I encourage you not to bet all your money on a single investment. Know your risk tolerance, abide by it and pace yourself so you have money left to place in future trades. Because tomorrow is always a new opportunity…
Bottom line: Discipline and managing your profits are critical to success. It isn’t as important as what you trade: stocks, options, bonds, commodities. Each one of those instruments is different, and it’s important to understand how to trade them.
I plan on releasing more masterclass videos to help you and other members on becoming better moneymakers. (Stay tuned!)
Success is the tide that lifts all boats.
OK, that’s it for me today, but be on the lookout for our next profit alert.
Sincerely,
Joshua M. Belanger
New Money Club