2 Winners in 2 Days!

Dear New Money Club Member,

Stocks started off hot this week, but our mid-week gains have been hotter!

We were able to close out 204% and 50% winning trades yesterday in TSM and MLCO, respectively. If you were able to lock in gains on either of these trades, we’d love to hear about your personal success.

Right now, your newest position in RF is sitting in the green by 25% after just two days.

Now, the fear gauge for the S&P 500, known as the CBOE Market Volatility Index (VIX), is holding at 25. That means stocks will continue to buzz around — but as you’ve seen, it pays to be prepared for more fast profit opportunities. 

This Friday is a September options expiration date. We do have two positions that will expire worthless, but stay tuned. I’ll keep you updated on all of our next moves. 

Portfolio Update

On Monday, we took the following actions:

Buy to Open Taiwan Semiconductor ADR (NYSE: TSM) Oct. 2, 2020, $85 calls (TSM201002C00085000) up to $1.15 per contract or better, for the day.

Buy to Open Regions Financial Corp. (NYSE: RF) Oct. 16, 2020, $12 calls (RF201016C00012000) up to $0.65 per contract or better, for the day.

And on Tuesday, we opted to:

Sell to Close Taiwan Semiconductor ADR (NYSE: TSM) Oct. 2, 2020, $85 calls (TSM201002C00085000) at the market.

Sell to Close 50% of Melco Resorts & Entertainment (Nasdaq: MLCO) Oct. 16, 2020, $20 calls (MLCO201016C00020000) at the market.

Right now, we’re holding:

  •     Nordic Amer Tankers (NYSE: NAT) Oct. 16, 2020, $5 calls (NAT201016C00005000).
  •     ANGI Homeservices Inc. (Nasdaq: ANGI) Sept. 18, 2020, $15 calls (ANGI200918C00015000).
  •     Energy Transfer LP Unit (NYSE: ET) Sept. 18, 2020, $6.50 calls (ET200918C00006500).
  •     Melco Resorts & Entertainment (Nasdaq: MLCO) Oct. 16, 2020, $20 calls (MLCO201016C00020000) — 50%.
  •     Regions Financial Corp. (NYSE: RF) Oct. 16, 2020, $12 calls (RF201016C00012000).

Let’s keep focused and let the market come to us. And, of course, I’ll be keeping you updated every step of the way.

Your Questions, Answered!

The mailbag is full, so let’s get to your most pressing questions.

“Yesterday, you recommended to only sell half of our MLCO Oct. call options. Why do you recommend selling half of our positions instead of selling them all?” — Brian J.

You'll often hear me say that making money is the fun part of trading ... but we have to earn the right to take our profit. 

So, I'm always looking to see where we can lock in gains on our winning option trades.

Why? It’s simple … it's so we can take profits early and reduce risk. Managing our profits is essential to being a successful options trader.

Yesterday, our MLCO call position was up 50% in five trading sessions. With gains that fast, we need to manage our risk by locking in profits. 

So, why sell half of your position and not close out the whole thing? Well, I don’t want you to miss out on more potential profits! Since these contracts don't expire for another 30 trading days, it allows us to hold on a bit longer. 

Stocks and options move on momentum. So after you sell the first half of your position, if an options trade is moving higher in a strong uptrend, then there’s a good chance the option will continue trending up.

Of course, the opposite may happen and the value could go down. But that’s another reason we sell half of our positions early. No matter what happens, you’ll lock in gains on at least half of the trade.

Now, your broker won’t let you sell half of a single contract. So, in order to take profits and let the other half ride, you'll look to buy contracts in pairs.

We’re not doing anything fancy here … we’re simply being smart with our money via risk management.

That’s it for me today. Be on the lookout for our next profit alert!

If you want your question answered, you can send it to me at questions@newmoneycrew.com.

Talk with you on Friday.

Sincerely, 

Joshua M. Belanger

New Money Club