Find Out: How I’m Outperforming the S&P 500 by 47% YTD

Find Out: How I’m Outperforming the S&P 500 by 47% YTD

Posted On July 23, 2021 3:02 pm

I love trading options because of the flexibility it provides. As I like to say, the Options360 service is ‘unconstrained,’ in that I’ll use whatever option strategy aligns with my thesis. 

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Meaning, if I think there will be a dramatic move in the markets, outright purchase of calls or puts will be employed.  If I think something is trending, I’ll choose a diagonal spread to focus on income collection or if I think a stock has simply reached a major support or resistance level, I’ll use a credit spread to take advantage of time decay, on the notion that while the stock might not move much, it will also not breach certain price points. 

This week the ‘unconstrained’ approach came into play as we closed out several positions including an iron condor in Salesforce.com (CRM) for a 47% gain, a diagonal spread in Akamai (AKAM) for a 63% gain and the previously mentioned bearish positions in Hilton (HLT) and Invesco QQQ Trust Series I (QQQ) for 85% and 96% gains, respectively.  

This week I did a free webinar explaining the Options360 3P approach of Process, Probability and Profits which you can WATCH IT HERE.

Admittedly it has not all been rainbows and butterflies, as a bullish position Coinbase (COIN) looks like it will die worthless next week incurring a loss.  So, despite my turning cautious two weeks ago, the Options360 portfolio is now up 25.6% for the year to date (YTD). Which means that Options360 is outperforming the S&P 500’s YTD gains by 47%.

As a side note, I’m proud to say the Earnings360 is killing it, as we have gone 6-1 on trades this week including a bearish play in Texas Instruments (TXN) and bullish in Snap (SNAP), which delivered 78% and 95% returns respectively. 

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This week in Options360 added a few new positions, including a bullish position in Las Vegas Sands (LVS) and a new bearish position in QQQs. The QQQ are starting to go parabolic, carried by good earnings from most of tech and the weight of FAAMG hitting new highs.  I’ve repeatedly discussed how the gigatech generals have carried the top line indices higher while there has been major pull by many of the soldiers. 

These heavy hitters, AAPL, AMZN, MSFT and GOOGL all report earnings next week.  I don’t doubt their reports will be stunningly strong.  But will they be met with a sell the news reaction?  That’s what happened last quarter. 

Which is why I think it’s worth spending a little money, using the Monday Wednesday expires, or what I refer to as the triple play of rolling to reduce cost basis, to see if there is a correction in the next two weeks.  

This will give me a hedge and the confidence to add new bullish positions in individual names; a couple I’m eyeing include airlines such as Southwest (LUV) and housing like Lennar (LEN). 

Stay tuned for what should be some serious action next week. 

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About author

Steve Smith

Steve Smith have been involved in all facets of the investment industry in a variety of roles ranging from speculator, educator, manager and advisor. This has taken him from the trading floors of Chicago to hedge funds on Wall Street to the world online. From 1987 to 1996, he served as a market maker at the Chicago Board of Options Exchange (CBOE) and Chicago Board of Trade (CBOT). From 1997 to 2007, he was a Senior Columnist and Managing Editor for TheStreet.com, handling their Option Alert and Short Report newsletters. The Option Alert was awarded the MIN “best business newsletter” in 2006. From 2009 to 2013, Smith was a Senior Columnist and Managing Editor for Minyanville’s OptionSmith newsletter, as well as a Risk Manager Consultant for New Vernon Capital LLC. Smith acted as an advisor to build models and option strategies to reduce portfolio exposure and enhance returns for the four main funds. Since 2015, he has worked for Adam Mesh Trading Group. There, he has managed Options360 and Earning 360, been co-leader of Option Academy, and contributed to The Option Specialist website.