Options Expiring Today — Here’s What to Do
Dear New Money Club Member,
Today is February monthly options expiration day, and we have a few options that expire today.
But before we dive into the portfolio, let me share a floor secret I learned to push through the red on the screen…
On the floor, when a trader had an ugly trading day, we’d say it’s a “black tape” day. And what they would do is put a piece of electrical tape over their PnL — profit and loss — statement.
It’s a mind trick, but some of the best successful traders I saw used it. Because even after a bad day, the best traders showed up the next day eager to see what opportunity may come to them.
Dealing with losses is the toughest aspect for everyday traders and investors to push through because of the fear of losing it all.
Now, it’s no secret markets haven't been too kind to our trades. Unfortunately, we’ve had about three forced errors on execution over the last few weeks with a position spiking higher, but then quickly falling back and becoming a losing position.
It’s easy for me to say, “Trust the system,” because I’ve done this for so long. But that’s how we can push through the losses to get to the wins.
Last year, we had 57 total trades — 34 winning trades and 23 losing trades for a winning percentage of 59% and an overall gain of 108%. That’s a real edge, and it’s why I trust the New Money system.
Now, the CBOE Volatility Index (VIX), aka the “fear” index, is still above our key 15 levels, trading at 21. Volatility has been able to hold this level, and it’s likely we’ll see a one-day sell-off next week.
OK, now let’s talk shop…
Portfolio Update
Despite closing two winning trades last week, we have a few expiring today that fell short of our profit targets.
Today, these positions expire:
- Flex Ltd. (Nasdaq: FLEX) Feb. 19, 2021, $20 calls (FLEX210219C00020000).
- América Móvil, S.A.B. de C.V. (NYSE: AMX) February 19, 2021, $16 calls (AMX210219C00016000).
- ProShares UltraPro Short Dow 30 ETF (NYSE: SDOW) Feb. 12, 2021, $12 calls (SDOW210219C00012000).
Unfortunately, we don’t have more time for these positions to play out. There’s nothing you need to do, and they will be removed from your account over the weekend.
With that, let’s run through our week…
On Monday, the stock market was closed in observance of President’s Day in the U.S.
On Tuesday, we issued an alert to:
Buy to Open BP PLC (NYSE: BP) June 18, 2021, $24 calls (BP210618C00024000) up to $1.75 per contract or better, for the day.
And on Wednesday, we issued a second buy alert to:
Buy to Open World Wrestling Entertainment Inc. (NYSE: WWE) March 19, 2021, $55 calls (WWE210319C00055000) up to $0.55 per contract or better, for the day.
So right now, we’re holding:
- BP PLC (NYSE: BP) June 18, 2021, $24 calls (BP210618C00024000).
- World Wrestling Entertainment Inc. (NYSE: WWE) March 19, 2021, $55 calls (WWE210319C00055000).
After-Action Report
This is our debriefing of every trade closed — or ones that expired. It’s where we analyze what happened, why it happened and how it can be done better … sort of like what the military uses after missions.
Flex Ltd. (Nasdaq: FLEX) Feb. 19, 2021, $20 calls (FLEX210219C00020000)
Date: February 8, 2021
Reason: Our system triggered a buy alert after bullish call buying positioned a $21 million New Money bet that shares would quickly pop higher for a profit before today, which is a 10,600% surge in new opening call options.
Outcome: Expired worthless.
Notes: We took the signal. But right after, our entry prices pulled back. That’s normal, but it doesn’t help when we have an option contract with such a short time until expiration. One thing I’ve noticed — with my back testing and when it comes to optimizing our capital — is to start cutting losses at 40%. I will share more in the coming weeks after I finish the tests, but this is a position we should’ve cut loose quicker.
ProShares UltraPro Short Dow 30 ETF (NYSE: SDOW) Feb. 12, 2021, $12 calls (SDOW210219C00012000)
Date: February 11, 2021
Reason: Our system triggered a buy alert after bullish call buying positioned a $9 million New Money bet anticipating that shares could pop higher for a big profit by today … which is a 3,800% surge in new call options opened.
Outcome: Expired worthless.
Notes: This was a lotto ticket type of trade. These options would’ve popped if we saw a sharp sell-off like we did at the end of January. It’s a loss, yes, but if we want to get a chance at big wins, we need to take our shots when it makes sense.
América Móvil, S.A.B. de C.V. (NYSE: AMX) February 19, 2021, $16 calls (AMX210219C00016000)
Date: February 11, 2021
Reason: Our system triggered a buy alert after bullish call buying positioned a $6.6 million New Money bet, which is a 5,700% surge in new call options purchased.
Outcome: Expired worthless.
Notes: We took the signal, but this was a dog. As I mentioned about FLEX, this is a position we should’ve cut loose quicker.
The market is great at humbling us at times. But if we keep focused and work through adversity, we’ll come out on top.
I’ll have a new trade for you on Monday, but until then, have a great weekend.
To your wealth, freedom and options!
New Money Club