By: Steve Smith
The market started 2022 with the PowerShares Nasdaq 100 (QQQ) and SPDR S&P 500 (SPY) dropping some 7.5% and 3.9%, respectively, through the first five trading days — breaking 2021’s record streak of 70 new all-time-highs and making it the worst first week of a year in 20-plus years. In 2018, January turned into a bad month, dropping some 11%. However, the selling didn’t begin until mid-month.
Meanwhile, the Options360 Concierge Trading Service started 2022 right where left off; with three winning trades and a partial profit in the fourth. While they weren’t huge gains, they did come quickly and without much stress. The trades occurred inside an environment of heightened volatility with both the indices and individual stocks flying around wildly for day-to-day and intraday.
I write this to once again emphasize how the Options360 approach is based on identifying attractive setups, risk management, and maintaining realistic profit expectations. To that end, Options360 is currently up 5.3% while the SPY and QQQ are down 3.9% and 7.5%, respectively.
Let me share three of these recent trades to illustrate the straightforward but disciplined approach.
The first trade Options360 made in 2022 was a bullish position in steelmaker Nucor (NUE). Here’s the alert which describes the ongoing rotation from tech into cyclical and the constructive chart setup (*Options360 Concierge Service grinds out consistent gains year after year.)
Nucor (NUE) is a leading U.S. based steelmaker. Rolled, hot or cold, sheet or plate, galvanized or not, however you like it they got it.
Construction makes up over 55% of its end-user with auto at 17% being the second largest segment.
This is a play assuming the economy can keep humming, leveraged to the notion inflation will persist and there will continue to be a rotation into value/cyclical names.
The chart is pretty basic; a building bullish wedge, coiling and ready for a breakout.
-Buy to open 1 contract Feb (2/18) 115 Call
-Sell to open 1 contract Jan (1/28) 121 Call
For a Net Debit $4.50 (+/-0.10)
As you can see on this updated chart, the NUE shares popped some 7% the very next day.
Many people might have taken this as a breakout and pressed for bigger gains. But, Options360 kept realistic expectations and was very happy to book a 38% overnight gain. With hindsight, that proved to be the prudent move as you can see NUE shares dropped some $15 of 10% over the next few days. In this case, prudence paid.
The next trade Alert Options360 members received was for a bearish put spread position in United Parcel Service (UPS). Again, the reasoning and technical setup and clear and concise:
“UPS is a great company but the chart looks like a possible double top. With higher fuel and other input costs could have a pullback prior to the earnings report at the end of the month.”
This morning, UPS shares dropped below the $210 level and Options360 members closed the position for a 60% gain over just a three-day holding period.
Yesterday, we established a Roblox (RBLX) bullish position, again a clean set up per the Alert:
“RBLX has filled the gap around the $80 level from which it ran up almost 75% to $140 following its earnings and Facebook’s name change. Let’s step in with a bullish spread.”
This morning, RBLX shares hit $89 and we closed the position for a 43% overnight gain.
Obviously, it’s very early in the year and there will inevitably be some losing trades and portfolio drawdowns. However, I wanted to share not just our hot start, but provide a peak of how trades are identified and managed through price and time. If we can keep securing quick profits, I’ll take it week after week.
This morning Options360 established a new trade, an iron condor, in Home Depot (HD) which will take longer to play out. But make sure not to miss on what could be our next quick winner.