By: Steve Smith
The world of crypto and non-fungible tokens has taken over people’s imaginations, their time, and, in many cases, a good deal of their money. We’ll try to stick with the ‘real world’ of businesses, as they pertain to generating sales and profits.
While we haven’t made headlines lately, the Options360 Service’s bottom line is doing just fine racking up profits in 2021. In less than 3 months; now up 19.2% for the year.
Not too bad, considering the S&P 500 and NASDAQ are each up only about 5% YTD.
We’ve accomplished this by being patient, only trading when there are attractive set-ups, and most importantly, managing risk.
Last week, I walked through how I turned a position in Wal-Mart (WMT) from a potential disaster into ‘barely a scratch.’ To sum it up: We went from looking at a possible $1,350 loss to closing it today for just a $62 loss. Very manageable.
This seems to mirror the overall market. After a few weeks of volatility which involved some uncomfortable shifting, adjusting, and outright de-risking, things have settled down with the upward trend mostly re-establishing itself.
During the tumult of rotation out of tech and into cyclicals, we took bullish positions in names such as fertilizer-maker Mosaic (MOS) and Pulte Homes (PHM), which we held for about three weeks, making adjustments along the way. We just closed them today (Tuesday) for 53% and 47% returns, respectively. I did this despite the fact that both have another three weeks until expiration. Why? Both positions had seen their shares move up and through our strike prices, meaning further gains would come slower and with more risk. Basically, both trades, having delivered 50%-plus returns had run their course. I took two relatively ‘easy’ 50%-plus returns in less than a month’s time. Now, I can look for something fresher and more fertile.
To wit, we established a bullish position last Thursday in McDonald’s (MCD) — shares made a huge move, pushing above $220, allowing us to adjust, which reduced risk by 55% while maintaining the positional for 60% within the next week. We made another new trade with Pinterest (PINS). On Monday, the chart set up an attractive entry point, and I sent an Options360 Service Member Alert to set up a bullish diagonal, and the position’s already up 15% today.
And lest you think I forgot my intention to short Beyond Meat (BYND) near the $148 level, per this March 3 article, the stock did in fact rally back to $150 yesterday. When I saw it failing or turning negative today, I fired off a bearish Alert to Options360 Service Members. We’re still waiting for the order to be executed, but I think my patience in waiting for an attractive entry point will be rewarded.