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AMC Stock up 3,000%!What is going on with AMC Entertainment? I'm sure you've heard the news: Defying all forms of fundamental analysis and business logic, AMC Entertainment AMC once again finds itself climbing higher. AMC is up 200% advance since last week and almost 3,000% since the beginning of the year. This is another coordinated short squeeze event by retail investors - especially the users of the Reddit Forum /WallStreetBets or "Apes" - as they call themselves. Back in January, AMC Entertainment and fellow Meme Stock, GameStop GME , were the focus of an attack on institutions and hedge funds that held substantial short positions in the stocks. "Being short" means that the investor believes that the price of the stock will fall and that the underlying business does not deserve its current valuation. A short squeeze occurs when the price of a stock climbs and goes against the short position, forcing the short sellers to buy existing shares to "cover" their positions. When a stock has an unusually high short percentage, like AMC and GameStop, investors can actually force the price to go higher by buying up shares at the current price. From there, it is simple economics: the supply of shares falls as the demand increases, driving the price of the equity higher. Just exactly how much have short-sellers lost on AMC? On Wednesday, June 1st, short-sellers betting against AMC lost $2.8 billion, bringing their year-to-date losses to more than $5 billion, according to S3 Partners. The idea of short squeezing these stocks was fueled on social media, Reddit to be exact. The subreddit r/WallStreetBets made AMC and GameStop its darlings, and along the way has amassed an army of Apes numbering over 10 million. Since then, the hashtag #SqueezeAMC has trended all over the internet. Daily trading volume for AMC has topped a staggering 650 million shares over the past few trading sessions, indicating that retail investors are all in! Why Is AMC Stock So High? Mark Twain once said, "history does not repeat itself, but it often rhymes" . AMC and GameStop are once again being squeeze by r/WallStreetBets and other traders that are growing tired of the market manipulation by institutions like hedge funds. There are other catalysts as well though, including the great re-opening following the COVID-19 pandemic. AMC operates nearly 1,000 movie theaters around the world and announced that all of its U.S. locations are back open following an aggressive vaccination rollout. Early indications from both the Easter and Memorial Day long weekends are that movie fans are ready to return to theaters. We are also nearing the summer blockbuster season that will see the return of big-name movies like Space Jam 2, F9 the latest Fast and the Furious movie, and the Suicide Squad sequel. Who is buying AMC stock? AMC CEO Adam Aron is a genius: He has also been hitting all the right notes with investors. Here are just 2 examples: 1.) Aron famously announced that AMC Entertainment was “under attack” by short-sellers, which served as a rallying cry for WallStreetBets. 2.) He additionally revealed that retail investors "own more than 80%" of the company at the last count, meaning a non-institutional base now owns a super-majority of AMC shares. At the last earnings call. he said: "We work for them. I work for them... and their ambitions and passions are important to me." 3.) And yesterday, he was announcing plans that AMC investors will be rewarded with special screenings and free popcorn. Contrast that with ex-GameStop CEO George Sherman, who stayed largely quiet while his company's stock price soared in late January. Did AMC Sell More Shares? Recently, AMC Entertainment sold 8.5 million shares to an investment firm called Mudrick Capital, which helped the company raise about $230 million. Shares surged 20% after this news. Interestingly enough, on the next trading day, shareholder Mudrick Capital turned around and sold all those shares for a quick profit. Mudrick stated that the stock was now overvalued, and given the recent volatility, it's hard to fault them. Had Mudrick held onto the shares, they would now be worth well over $500 million. This morning, June 3rd, AMC announced that it filed for additional share offerings with the SEC. They said it may sell some of the 11 million shares “from time to time.” Apparently, that time was now as it completed the offering in about three hours. AMC said it sold 11.55 million shares at an average price of approximately $50.85 per share - bringing in an additional $587.4 million. This is on top of the $658.5 million already raised this quarter, resulting in a total equity raise in the second quarter of $1.246 billion. What's The Highest AMC Stock Has Been? Yesterday, on June 2nd, AMC rallied an unimaginable 95% to close the trading session at over $72.62 per share, which is the higher it has ever been. AMC has now gained 3000% year to date, which is a clear illustration of the current hysteria surrounding the stock. AMC has now surpassed GameStop's market cap, and is clearly the new favorite stock of WallStreetBets. How High Will It Go? Can AMC really hit 100,000? Nobody actually knows! Any guess is pure speculation right now, so please do not take anyone's word for an actual price target. A short squeeze like this is a ticking timebomb, and as we saw in January, the downside comes harder and faster than the ride up. If you do a quick scan of social media, you will find price targets of anywhere from $100 to $100,000 per share. Remember, it is all speculation, and there are many people who will take advantage of investors feeling FOMO, by pumping out inaccurate information. Let's take the popular figure of $100,000 per share as an example. There are 498 million shares outstanding for AMC. Simple market cap calculation would place the value of AMC at about $50 trillion, or more than the entire S&P 500 index, which is valued at about $35 trillion right now. Before we talk about whether you should be investing in AMC or not, let's talk about the fundamentals: Is AMC losing money? Yes. 2020 was tough for AMC: The company lost 4.5 Billion Dollars. AMC is in a tough position: During the pandemic in 2020, streaming services like Netflix, Disney+, Amazon Prime, Hulu and others gained a lot of momentum. And many people upgraded their home theaters. But with the cash infusion of more than $1.2 Billon, AMC can buy up their competitors, upgrade their theaters and invest in their growth. And as COVID restrictions are being lifted in the US, people are ready to get "back to normal" , and this includes visiting theaters. So AMC could be in a good position to stay in business. Will AMC go up tomorrow? Who knows? In their SEC filings, the company said: "We believe that the recent volatility and our current market prices reflect market and trading dynamics unrelated to our underlying business, and we do not know how long these dynamics will last." And AMC CEO Adam Aron warns: "Under the circumstances, we caution you against investing in our Class A common stock, unless you are prepared to incur the risk of losing all or a substantial portion of your investment." "Should I Buy AMC Shares?" This is the real question: should you buy AMC? Is AMC a good buy? If any other stock gained over 1,100% in less than six months, would that seem like a good time to buy in? Warren Buffett famously said, "be greedy when others are fearful, and fearful when others are greedy". And even the CEO himself thinks that the company is overvalued, stay away from the stock! I can guarantee that much of the FOMO investors buying in now are doing so out of greed. Now, I'm not saying the stock won't continue to rise. WallStreetBets has certainly rallied a large enough army to keep the momentum going for now. But realistically how much higher can we expect the stock to rise? But after last week's gains, most of the move might already be over, and trust me when I say, this is not a bag you want to be left holding. So you might be asking what about me? Would I buy this stock? Heck no! I tend to steer clear from volatility and this level of risk. My focus is always on SRC Profits: Systematic, Repeatable, and Consistent . If you are investing your hard-earned money, there are certainly safer investments to make than a highly speculative social media short squeeze attempt. How to buy AMC shares? At the end of the day, if you still want to buy AMC shares, all you need to do is log on to your brokerage and decide how many shares you would like. With a stock that exhibits as much volatility as AMC does, you may want to consider entering a stop/loss to protect yourself from the downside, which almost always comes faster than you think.
NYSE:AMC
by rockwelltrading
2
Bitcoin Crash 2021 Bitcoin has been on a rollercoaster ride in the past week. It crashed more than 50%! So what’s next? What is causing the Bitcoin crash? Is Bitcoin still a good investment? Cryptocurrency Markets Crashed By 50 Percent. What’s Next? So what happened? Bitcoin gained a lot of popularity in late 2020: It went from $10,000 to $42,000 in 4 months before crashing 30% to $28,000 in late January 2021. And then, in February 2021, Elon Musk added fuel to the fire by saying that Tesla TSLA bought $1.5B in Bitcoin and plans to accept it as payment for its cars. As a result, Bitcoin rallied above $60,000. At that time, it seemed that more and more companies are jumping on the cryptocurrency bandwagon. In late March, Paypal announced that it will allow cryptocurrencies as payment, mainly Bitcoin , Ethereum and Litecoin : Bitcoin is reaching new highs of more than $64,000 when some investors are taking profits, which is absolutely normal. Bitcoin drops to $48,000 but quickly bounced back to $60,000. Why is Bitcoin crashing? Bitcoin Crash 2021: What You Need To Know: On May 12, 2021, Elon Musk Tweeted: Tesla has suspended vehicle purchases using Bitcoin. We are concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel. Cryptocurrency is a good idea on many levels and we believe it has a promising future, but this cannot come at great cost to the enviornment. Tesla will not be selling any Bitcoin and we intend to usi it for transactions as soon as mining transitions to more sustainable energy. We are also looking at other cyptocurrencies that use <1% of Bitcoin's energy/transaction. In a matter of minutes, Bitcoin plummets 5%. Over the next few days, the bad news keeps piling on. JP Morgan (JPM) reported that institutional investors are dumping bitcoin and going back into gold, and 2 days later, China calls for crackdown on bitcoin mining and trading. And if that’s not enough, now the US Treasury is cracking down on Cryptocurrencies too, saying that they will require any transfer worth $10,000 or more to be reported to the IRS. So Bitcoin has been crashing more than 50% in just over a month: From $64,000 on April 14th, 2021 to ~ $30,000 on May 19th, 2021. As a result, companies that are tied to Bitcoin and other cryptocurrencies are tumbling, too: Tesla TSLA , Square SQ , Coinbase COIN , and Cathy Wood’s Ark Innovation Fund ARKK . Is bitcoin still a good investment? (How does it affect YOU?) Will bitcoin prices recover? Is the Bitcoin crash in May 2021 just temporary, or is this the end of Bitcoin? Well I like to trade what I see and not what I think. Bitcoin has broken the 200-Day Moving Average, which is a bearish sign. We’re also past any “normal” Fibonacci Retracements and are still in a downturn. After all the negative press, especially regarding its energy consumption, it might be tough for Bitcoin to recover. Alternatives To Bitcoin There are other interesting alternatives. Ethereum: All of the cryptocurrencies are going down. Looking at a chart for Ethereum, ETH, it has not crossed the 200-day moving average yet. It has found support and is now bouncing back. Ethereum uses less than 1% of Bitcoin’s energy consumption per transaction. Here is why I’m getting excited for Ethereum: Think about it from a trading perspective. If I could pick up ETH for a price of around $2,000, what is the upside? It could double and go up to around $4,000 which is very possible. Or, it could go down to $1,000. This gives me a 2:1 risk/reward ratio. Litecoin: Litecoin has also recently dropped quite a lot trading at around $173. Let’s say that we can pick this up for a longer-term investment for around $150. What would be the downside? The downside is maybe it drops to $75, but could the price go as high as $300 or $400? Absolutely! So you could 2x or 3x your money. So this is why, right now, I’m not too interested in Bitcoin. I think Bitcoin was a little bit overhyped, and people are now dumping it, but I am interested in these other cryptocurrencies. Libra/Diem So Facebook is back, and they announced a cryptocurrency called Libra. They want to work with regulators and will rebrand the coin Diem. I will be keeping a close eye on this one and here’s why: Think about it. Facebook with their vast network with Facebook, Instagram, & Whatsapp. If they want to push a cryptocurrency, they definitely have the power. What Will I Do? Right now, I will be keeping a very close eye on what is happening in the cryptocurrency markets, and I’m looking to buy some cryptocurrencies at these levels when they are available at a discount. Full disclosure, I currently have not bought any cryptocurrencies, but I’m currently doing research and looking into a few wallets. If I can get them at a discount, I’m currently very interested in this.
BITSTAMP:BTCUSD
by rockwelltrading
2
Sell In May and Go Away?You might have heard the saying “Sell in May and go away.” It is an old investing adage that has been around for decades, but does it actually work? In this blog post, we are going to find out what’s best to do. We will discuss: 1. What is the meaning behind “Sell in May and go away?” 2. Does sell in May and go away work? 3. Should you sell in May and go away? 4. Two reasons not to sell in May and what to do instead. Let’s get started: 1. What Is The Meaning Behind “Sell In May And Go Away?” The saying “Sell in May and go away” has been around for a long time. It was first recorded in 1937 by John Hill via The Financial Times of London. The original saying was “Sell in May and come on back on St. Leger’s Day.” This phrase refers to a custom of aristocrats, merchants, and bankers who would leave the city of London and escape to the country during the hot summer months. St. Leger’s Day refers to the St. Leger’s Stakes, a thoroughbred horse race held in mid-September and the last leg of the British Triple Crown. And it seems that American traders have adopted the saying. Americans are more likely to spend more time on vacation between Memorial Day and Labor Day. 2. Does “Sell in May And Go Away” Work? And indeed, for over 50 years, the stock market performance supported the theory behind the strategy. From 1950 to around 2013, the DOW has had an average return of only 0.3% during the six-month period from May to October period. In comparison, the Dow had an average gain of 7.5% during the November to April period. So it seems that “Sell in May and Go away” is a strategy that may have worked for many years. But In recent times, it seems like the strategy has fallen out of favor. Technical analysts at Merrill Lynch looked at historical data and found THIS out: Looking at 3-month seasonal data going back to 1928, the June-August period typically is the second-best of the year, with gains 63% of the time, and an average return of 2.97%! 3. Should You Sell In May And Go Away? With all this conflicting data, does it make sense to sell in May and go away? Is this a good investment strategy? You know me — I always say “Trade What You See And Not What You Think!” Always look at the market data! As an example, last year, between May 4th and August 31st, 2020, the Nasdaq rose 28% (refer to chart). If you would have sold in May and "gone away," you would have missed out on these gains. 4. Two Reasons Not To Sell In May And What To Do Instead Maybe it makes sense to sell in May and go away when you’re an investor. MAYBE... But as a short-term trader like me, May is a GREAT month to trade, and here’s why: I like to trade The Wheel Strategy . With this trading strategy, you are selling option premiums. And there are 2 factors that influence options premiums: - Volatility When volatility is high, option premiums are higher. The Volatility Index VIX for the past few month, has been pretty low in March and April. But now, in May 2021, it's spiking up again. This means that options premiums are higher, which is perfect for a seller like me: I can get more premium! - Down Days Step 1 of The Wheel Strategy is selling puts, and you get more premium for puts on “Down Days” for such strategies. According to the NASDAQ , thus far, in May 2021, we had 7 “down days” and only 4 “up days." On “down days," there are many more trading opportunities. Last week, when the Dow Jones Industrial Average had its worst week since February, I made $3,722 in profits. Here Are Some Of My Trades In May: Let’s take a look at these trades in more detail: - Trade #1: Snapchat SNAP Snapchat recently had some rough weeks. In less than 2 months, it traded from a high of 72.50 to around $50 where it found some support. Most retail investors would stay away from a stock like this but I saw an opportunity to “buy it at a discount” : I sold Puts with a strike price of 47 and an expiration of 4 days. If SNAP closed below $47 on May 14 (the expiration date), I would have gotten assigned and bought SNAP for $47. I would consider that a bargain. If SNAP closed above $47, I would have just kept the premium that I received for selling calls. In this case, that’s $525. SNAP did close above $47 on May 14, and I collected $525 for 4 days of exposure in the stock market. - Trade #2: Square SQ Square looked very similar: Mid-February, the stock made a high of $280, but then it retreated to $200. Most market participants would not trade a stock like this, but looking back over a six-month period, I saw some good support around the $200 — $203 level. I sold 5 Puts with a strike price of 202.50 and an expiration date of May 14th. I received $100 in premium for each put, so I collected $500 in premium. On May 14, SQ closed above $202.50, and I made $500 in only 4 days. That’s a very nice return. - Other Trades I Took I sold 119 Puts on Apple , sold 212.50 Puts on Boeing , And I sold 39.50 Puts on Dave & Busters . All of these stocks have lost in value over the past few months. Investors who follow a ‘buy-and-hold approach” would lose money in this scenario, but as an active investor, I can apply trading strategies that make money even if the stock is going sideways or even moving lower. Summary “Sell in May and go away” is an old Wall Street adage that might be useful for buy-and-hold investors. But active investors like me are always on the lookout for trading opportunities. And with the right trading strategy, the increased volatility combined with markets that are moving lower is a dream come true. You need to have the right trading strategy. I personally like to use the PowerX Strategy for markets that are trending, and I trade The Wheel Strategy in choppy market conditions as we experience right now. With such a strategy, I am able to make money even if the stock is going sideways or lower. I for one will NOT sell in May and go away!
TVC:NDQEducation
by rockwelltrading
2
Options vs Stocks: Which Is Better?If you are wondering whether to trade options vs stocks, then this article is for you. There’s no simple answer to that question because it depends on how much money you have and your risk tolerance level. This blog post will cover the 7 topics that you need to know to answer the question “Is Options Trading Better Than Stocks?” 1. What Is The Difference Between Buying Stocks and Buying Options? Let’s keep it simple: When you buy a stock, then you own a share of the company and get paid dividends. Buying options, on the other hand, means that you only have the right to buy or sell a stock at a specific price before the option expires. But you don’t own the stock (yet). As you will see in a few moments, options trading requires much less capital than buying a stock, and therefore it’s very attractive. But it can also very confusing. My goal is to make it simple for you. Let’s start with an example: 2. Which Is Better: To Buy A Call Option On A Stock Or To Buy A Stock? Let’s use Apple (AAPL) as an example. Right now, the market price (at the time of this writing on May 6th, 2021) of AAPL is 128.70. Let’s assume, you are bullish on Apple and expect AAPL to go higher. So you could buy 100 shares of AAPL, but this would come with a high price: 100 shares * 128.70 per share = $12,870 If you have a small account, this might be too high of an investment. The good news: You can trade options instead. When you buy a CALL option, you have the right to buy 100 shares of AAPL at a set price (the strike price) on or before the expiration date of the option. You could buy a call option that expires on June 18th. Today is May 6th, so you have 43 days before this option expires worthless The price of the option is $3.75. Options come in “100 packs”, so your investment to buy this call option is only $3.75 * 100 = $375 Why Buy Options Instead Of Stocks? First of all, it’s much cheaper: Compared to the investment of 12,807 to buy 100 shares, that’s only 3% of the money that’s required. And because of that, options more profitable than stocks. Let me explain: 3. Are Options More Profitable Than Stocks? Since you are bullish on AAPL, you expect the stock to go up. Let’s say that over the next few weeks, the stock goes to 140: Let’s take a look at the profits from your stocks first: You bought 100 shares of AAPL at a price of $128.70 per share. Now each share is worth $140. So your profit is 140–128.70 = 11.30 per share * 100 shares = 1,130. Based on your investment of $12,870, that’s 8.8% Return on Investment (ROI). That’s not bad, but let’s take a look at the call option: How Are Options More Profitable Than Stocks? The call option that you bought gives you the right to BUY 100 shares of AAPL for $130 before June 18th. So if AAPL shares move up to $140, you can buy 100 shares of AAPL at $130 and sell them immediately at $140. This means that your profit per share is 140–130 = 10. And since you are trading 100 shares, your profit would be $1,000. But keep in mind: You paid $375 for the right to do this, so you need to subtract this from your profits: 1000–375 = 625. Your total profit is $625. Doesn’t sound much, but based on your $375 investment, that’s 167% return on investment (ROI). In summary: You made more money in terms of absolute dollars on the stock ($1,130 vs. $625), but the money you needed to make this profit was much less: $375 vs. $12,870. And that’s why your ROI is 167% when trading the option vs 8.8% when trading the stock — even though the stock price is exactly the same. Pretty cool, huh? 4. How Much Money Do You Need For Options Trading? As you can see from the previous example, you need MUCH less money when trading options vs trading stocks. When trading options, you can get started with as little as $2,000. Check with your broker about the minimum requirements to open an options trading account. So if you have a smaller account, trading options might be much better for you than stock trading. 5. Can You Lose Money Trading Options? Let’s talk about the risks of options trading, specifically the question “Can you lose money trading options?” The answer: YES, of course! In the example above, you could lose the premium you paid for the option, i.e. $375, if the stock price does not move above the strike price of $130. If AAPL remains below $130 until the expiration date of June 18th, your option expires worthless. And here’s why: With a call option, you have the right to BUY 100 shares of AAPL for $130. If AAPL is trading below $130, let’s say at $128, you don’t want to exercise your right to buy AAPL at $130. Because then you would pay MORE for the stock than you would if you bought it right away. Making sense? So if AAPL stays below $130 until expiration, your option expires worthless and you lose the premium you paid for the right to buy the stock. Can You Lose More Than You Invest In Options? When you are BUYING options, you can not lose more than the premium that you pay when buying options. So that’s good. However, when you are SELLING options, that’s a different story, and we will cover that later. So in summary: When BUYING options, the maximum amount that you could lose is the premium you pay when buying the option. 6. What Are The Risks Of Options Trading? YES, there are risks when trading options: a) Selling Options Can Be Dangerous. As you have seen, when BUYING options your risk is limited to the premium you pay when buying the option. However, as a seller, there’s a lot more risk. In some cases, you can have UNLIMITED risk. We will cover this in detail in a later article. b) Buying Out Of The Money Options. Risky before the probabilities are low. c) Know What You’re Doing When trading options, there are a few more things to consider: Call options vs put options Strike Prices Expiration Dates … and then there are also these pesky “Greeks” like delta, gamma, theta, rho, etc. And when you have more things to consider, there are more possibilities to make mistakes. So make sure that you understand all these factors before you start trading options. We will talk about “The Greeks” later. Are Options Riskier Than Stocks? YES. Because it’s easier to lose ALL of your investment. Let’s continue our example from above: Trading Stocks You bought AAPL at $128.70 per share. If AAPL drops to $125, then you would lose $3.70 per share, or $370 for 100 shares. Based on your initial investment, that’s only 2.9% Trading Options You bought the 130 Call Option for $3.75. If AAPL doesn’t move above 130, you lose ALL of your investment, i.e. 100%. Yes, the investment is much lower, but instead of losing 2.9% as you would when trading stocks, you would lose 100%. Selling Options And when selling options, you can lose A LOT of money. Selling options can be very profitable. In fact, I made more than $75,000 in less than 5 months selling options… … BUT it’s also very risky. Compare options vs stocks like riding a bicycle and riding a motorcycle: Riding a motorcycle gets you to your destination quicker. And it can be more fun. But it’s also much riskier than riding a bicycle. 7. Can You Really Make Money Trading Options? Absolutely! There are many advantages to trading options, and it is possible to make money with options. Is there a safe way to trade options? You need to know what you are doing, and you need to have a solid trading strategy. Find a strategy that you understand and then practice it on a simulator. And when you are ready, start making money with it. Can Option Trading make you rich? When trading options, you will often see returns of 167%, 200% or even 300%. Therefore, it’s easy to believe that options trading can make you rich. But keep in mind: With these high returns, comes high risk. Yes, you can make 200% or 300% when trading options. And you can lose ALL your investment, as you have seen above. Don’t think of options trading as a “get-rich-quick-scheme”. But when used correctly, options trading is perfect to grow a small account into a bigger one. Summary: Should I Trade Options YES! Should I trade stocks or options? Why not do both? Best of both worlds! Is options trading worth it? YES! It can be very rewarding! As we just covered with trading options, there are many, many advantages. If you are not trading options yet, I highly recommend that you start looking into them.
NASDAQ:AAPLEducation
by rockwelltrading
1
FSR - What Happens Next? Hi, this is my new update for Fisker. From 2.Mars until now, FSR has fallen over 60% and I think we have reached the bottom. We have now tested the support level around $10.30-10.50, the RSI is under 30 and that means FSR is oversold and that is a good sign and now the RSI is getting ready to test the support 24, once we test it then we are going to make a double bottom in RSI chart and it is time to takeoff and I expect we are going to make a bottom head and shoulders and that indicates we have reached the bottom. The first resistance we have to test is between $11.85-12.20, once we break it, the next one is around $15. So be patient ;)
FLong
by GOAT1375
When To Sit On Your Hands When TradingNow, as you know, I like to use the PowerX Optimizer to find the best trades according to the PowerX strategy, along with The Wheel Strategy. So here’s my morning routine. Usually, I’m in front of the computer at 8 a.m. Central Time. That is 30 minutes before the US markets open. I run the scanner on PowerX Optimizer, and it finds possible trades based on my criteria. My Criteria For Finding Stocks My criteria, for starters, is I like to look for long and short signals because I like to play the markets both ways. I want to see at least a 60% return on my investment. I also want to see stocks that have a closing price between $5 and $250, because I don’t like to trade stocks that are below $5. I want to see a profit factor that is higher than 3. This means that for every dollar that I would have lost trading the strategy, I would have made $3. I also want a risk-reward ratio of at least 2%. Usually, there are anywhere between 4 & 8 stocks that come up on my scanner every day. I use three criteria to find A-plus trades. So here’s what I’m looking for. Number one, I’m looking for gappiness. I look back to see if the stock had a lot of gaps over the past year. I look back over the past 13 months. Number two, I’m looking for is trendability. What does trendability mean? It means that I want to see nice trends to the upside and the downside. And the last thing, number three, is I’m looking at the P&L chart. What does the P&L chart mean? Now, this is one of the strengths of the PowerX Optimizer software, and this is why I use it every single day. The P&L chart basically shows you what would have happened if I had traded this stock according to the rules of the PowerX strategy over the past year. So I can take a look at the trading report where I see for the past few trades, what I would have made in profits & losses. When To Sit On Your Hands Anyhow, this morning (at the time of this writing) I just saw EVRI on my scanner and it passed MOST of my criteria. First of all, it did pass all my scanner criteria, otherwise, it wouldn’t have come up here. Also, it did pass 2 out of my 3 criteria in terms of gappiness and trendability. But when it came to the P&L chart, it didn’t meet my criteria. So this is where this morning I did the most difficult thing for a trader. I was sitting on my hands. You see, at the beginning of my trading career, I had this little voice in my head and this little voice in my head said, “If you don’t trade, you don’t make any money.” Well after I forced some trades, I realized, well, if you don’t trade, you also don’t lose any money. This is why it’s so important. In the beginning when I got a new tool, or when I had a new trading strategy, I wanted to trade it. All I wanted to do was trade. However, when there’s nothing to trade, DON’T TRADE. This is why I use the PowerX Optimizer. It a fantastic job of keeping you out of trouble. So now, as you know, I am trading two strategies. In addition to trading the PowerX strategy, I’m also trading the Wheel. So also for the Wheel, I started looking for trades. Let me show you what I was looking for this morning. One of the trades that I thought, ahh you know what, this might actually be a decent trade was Marriott, (MAR), but when I looked, however, there wasn’t enough premium in there to sell according to the Wheel. I looked at another stock that came up on my radar this morning, which was (PENN). There was some great premium in there but PENN sounded rather risky. You see, for me, it is very, very important that I have a great track record. Now at the beginning of my trading career, I would have forced these trades. I would have said, “Oh my gosh, I cannot be done working after one hour,” because this is what happens sometimes in the morning. I sit down in front of the computer at 8 o’clock, which is half an hour before the open, and I run through the PowerX Optimizer, and don’t find anything. Now, one of the things that of course, I do every single day, is that I check my open positions, and in the PowerX Optimizer, I have my watch list. So first I look for new trades, and secondly, manage my existing trades. I don’t, however, need to overmanage my account when there are days where there is nothing to trade. What I used to do way back when I was still new to trading, and nothing would come up, I would adjust my criteria. I said, yeah, you know what? Instead of getting a 60% return on my investment, why don’t I lower it to 50%, or why don’t I lower the winning percentage to 35%. Maybe lower the volume to 200,000. I had to learn the hard way early in my career not to do this. Summary So anyhow, in summary, there will be days when you’re all excited, but you see, in order to make money with trading, two conditions have to be met. Number one, you have to be ready, and number two, the markets have to be ready. You may be ready but if the markets are not ready, you got to sit on your hands. The beautiful thing as traders, it’s not that today is the trading opportunity of a century. No, tomorrow there will be more trades, on Wednesday will be more trades, on Thursday. Every single day I’m running the scanner according to PowerX Optimizer and I will find more opportunities to trade. So today, one of the hardest lessons, and this is why I wanted to share it with you, sit on your hands. Anyhow, if you enjoyed this video, do me a favor and click on like so that more people will see it.
TVC:SPXEducation
by rockwelltrading
How Earnings Season Affects OptionsAs most of you are aware, it is earnings season. So today we’re going to talk about how earnings season can impact options trading, because, as you know, I trade options. Now, just a brief intro. Earnings season happens quarterly, meaning four times a year, and this is when corporations reveal their financial results for the previous quarter. Now, the results of a company’s earnings report can have a major impact on the stock price, and options will often price in the expectations for a big post-earnings move before the event. This is why it is likely that options premium are more expensive during this time. Implied Volatility One thing to know about this and how it can impact your trading is implied volatility. See, there several things that make up an options price, including the market’s expectation for future volatility, and that is called implied volatility. So why is this important? Well, as the buyer of an option, higher implied volatility means that you are paying more for your contract. So if you buy an option before earnings and hold through earnings, you put yourself at risk for a so-called volatility crash. Now, part of the reason implied volatility goes up so much ahead of earnings is because traders don’t know which way the stock is going to go or by how much. I mean, remember Netflix at the beginning of March? Who would have known that Netflix would soar 17%? But you see, once a company reports earnings, there is no more uncertainty, and this is when implied volatility drops, and in some cases, so does the options price. So if you bought an expensive option, there’s a chance that you have to sell it to close at a lower price even if a stock moves in the direction you want it to. And let me show you a very, very specific example of a volatility crash and why it is so important that you understand the concept of volatility and how it can impact your options trading. So I want to show you right here we see Seagate. Seagate reported earnings last week. And so here is the pre-earnings options data. The day before Seagate, STX, was trading at $61.45, and an At-The-Money call with a 61.50 strike price was going for the last traded price of $1.74, and the implied volatility was 128%. On the other hand, the put was going for $1.82 and the implied volatility was also 128%. Now, this was the day before earnings. Now let’s talk of what happened the day after earnings. So again, here Seagate was trading at $61.45 before earnings, but then the next day, Seagate dropped to $59.33. So it fell dramatically and therefore, and the price of the 61.50 call is only a penny. So it’s not surprising that the call is not worth anything, but here’s the key. Even though the stock fell quite substantially, the put only went from $1.82 to $2.51 so it went up because puts go up as the stock goes down. So this means that the put only went up to $0.70, $0.69 to be exact. You see this is how the volatility crash affects the option price, because even though the put is worth more now, and is now in the money, but it also lost a lot of value due to the decline in implied volatility. See, the previous day, it was 128%, this implied volatility, and the day after only 96%. So you have to factor this in when trading options into earnings. How Is Implied Volatility Measured? So let’s talk about this implied volatility thing and how is this measured, right? You know me, I’m all about practical stuff, so I don’t want to bore you with the math behind it and I don’t have to. The good news is that there are plenty of places online that calculate the implied volatility for you, and I want to show you exactly how you can see if the implied volatility, is high, low, or average. Here is the easiest way to do it. You compare the implied volatility to the stock’s historical volatility for exactly the same time frame. The implied volatility measures the market expectation for future price action. Now, the historical volatility measures the volatility for a stock that already occurred over a specific time frame. All you have to do to see if the implied volatility is high, low, or average compare it to the historical volatility. We can use the implied volatility of AAPL Apple’s Q1 earnings season. Apple was trading at 142. For an at-the-money call, expiring in four days, the implied volatility was 71%, and for the put was 70%. The historical volatility of Apple. And this is something that you’re charting software can show you, it makes sense to look at it in 10, 20, 30, 40 days increments. So if we were to look at the past 10 days, the historical volatility was 37%. But the call was trading at 71%. So what does it tell us? It tells us that the premium on this call, and also on the put, was running more expensive than usual. So now we can see, how this is affected by earnings. Now, let’s take a look at the implied volatility of an at-the-money Apple call from the same time that expired later out at, let’s say March 19th. So for calls expiring March 19th, you see right now the implied volatility is much, much, much lower at 43% for the call, and 43% as well for the put. The historical volatility over the past 60 days was 40.69%. Now compare this to the 43% and we see that it is pretty much in line here. So this means that the premium that was on these calls and puts on options that had 53 days until expiration was pretty much average. Why You Shouldn’t Sell Options Into Earnings Options traders are always talking about implied volatility and historical volatility, and now you know what it is. Now I want to tell you why I don’t sell options into earnings. I mean, even though the stock moves in the direction that you want to, your option premium is getting sucked out of there because of the volatility crash. You see, and this where, as an option seller, you might say, “don’t I want the premium to be as high as possible?” and yes, of course, you do. But let me make you very clear why I don’t sell options into earnings. If you have been following me for a while, you know that I love trading the Wheel, and as part of this strategy, we are selling options. Well you see, earnings plays are hit-and-miss. Sure, everybody can get lucky and most people who start trading expect their account to explode from one or two big trades. This is where we have some stocks that are jumping just dramatically. Looking at Intel, INTC over the last three earnings. Huge gap down right when we had earnings, then there was another earnings play, and Intel really crashed down hard again. Then also here during the last earnings season, initially, Intel went up but then started crashing down. You see, some people like these earnings plays because they believe the hype that they can make a lot of money with very little work involved, but see, trading just doesn’t work this way because, in reality, the key to becoming successful in trading is consistency and growing your account systematically. That’s what I mean when I talk about generating SRC profits, right? SRC is an acronym that stands for Systematic because I like to trade what I see and not what I think. This is why I use indicators and have a trading strategy that tells me when to trade, what to trade, when to enter and when to exit. The R stands for repeatable and by trading my plan, I’m able to find repeatable profit-making opportunities. The C in SRC profit stands for consistency. You see, I’d rather make slightly less money more often than biting off all my nails waiting for a big winner. As you know, part of my systematic approach to trading is to use The Wheel Strategy and the PowerX strategy. Now, especially with The Wheel strategy that, where I’m trading right now with you here, the idea is to get paid while you wait to buy the stock, and because I’m collecting premiums on the puts that I sell, I’m looking for stocks with higher volatility, right? This means making more money, and as a rule of thumb, I look for stocks with an IV, implied volatility, of at least 40%. The Wheel strategy can relatively safely produce profits, but I don’t recommend you to trade into earnings, at least that’s not what I do. So I will not target options with an expiration date that includes the company earnings report. I am trading options before we are running into earnings. So this is why I think it is very important that you know when trading options, whether it is buying or selling, that you don’t trade into earnings. At least that’s what I do because earnings are a wildcard and there’s just too much uncertainty. Remember, I’m not looking for fireworks here, I’m looking to systematically grow my account through consistent and repeatable strategies. Where To Check For Earnings Now, I want to give you two more resources, if you want to see for yourself who is reporting and when. These are two websites that are pretty cool that I personally use. So the first one here is “stock earnings.” If you go to stockearnings.com or they even have stocksearning.com, they will show you see the notable earnings that are coming up this week. Now, another one that many people like to use is earningswhispers.com. So that’s another great source for finding out when companies will report earnings because this way you can make sure that you’re not trading right into earnings. It’s always good to know when they report earnings if you have any open positions, whether you’re buying stocks or selling stocks so that you’re not caught off guard. So I hope that this helped you to see how earnings impact option prices and why I never sell options into earnings.
NASDAQ:INTCEducation
by rockwelltrading
AAPL (Apple) – Week 18 – Upward momentumOn the daily timeframe Apple (AAPL) started a correction in September 2020 and there is a high probability that it ended in March 2021. From the March lows we got an up move that stopped at $139 USD on 29th of April. We are now seeing a correction for that first up move that will drop the price to the support area marked on the chart or at the blue trendline (if it is deep). After that we expect the price to go up. Trade with care. Best regards, Financial Flagship Disclaimer: The analysis provided is purely informative and it should not be used as financial advice. Remember that you need a plan before you start trading; so, take this knowledge and use it as a guidebook that will ultimately help you understand the market and easily predict your next move.
NASDAQ:AAPLLong
by financialflagship
16
Emotions In Trading: Biggest Account KillerTrading is fun and every trader is happy when their trades move in the right direction, but when a trade goes against you, you will experience a lot of emotions: Fear, anxiety, regret, doubt, maybe anger… … and these emotions in trading can lead to some bad decisions that could kill your account. In this article, I’ll show you how to control your emotions in trading so that you become a more relaxed trader. 1. Recognize Your Emotions When trading, you WILL experience emotions. The main emotions are: Excitement Greed Fear Anger Frustration Let’s talk about these emotions and how to deal with them. Emotion #1: Excitement When trades are going in your favor, it’s natural for you to be excited. We all love to see “green” in the account, but here’s the problem with that: when trades are going in your favor, you may be too excited and take on more risk. I have seen this over and over again, especially when trading “The Wheel” options strategy. During the first few trades, traders are usually very careful. They do a great job in picking the right stocks, then they take a few good trades and their account is up nicely! All of a sudden, they get overconfident. It seems that the trading system can’t lose, and so they increase risk because “things always turn out for the best,” but that’s when trouble starts. You’re no longer looking for “the best” trades. You feel invincible and want to make as much money in a short amount of time as possible. You start trading with more & more risk, and start choosing stocks that you shouldn’t choose. Here are a few examples: TLRY, SPCE, WKHS, LABU The premium is attractive, and you thought: “I’ll be fine, and if not, I can fly a rescue mission like Markus usually does,” but then you get stuck in a trade, like some of you are. So please be careful when you experience excitement because it quickly leads to overconfidence, and the markets like to show overconfident traders who’s boss! Emotion #2: Greed Next on the list of emotions in trading is greed. Greed is okay as long as you don’t let it take over your trading. My P&L so far is $69,205 at the time of this writing: My goal is to make $15,000 per month, and thus far, I have made almost $70,000 in less than 4 months! I could get greedy now and say, “Why not $20,000 per month? Or $30,000?” But I am going to keep trading with discipline and make sure that my greed doesn’t get the best of me. Be humble! Be grateful for what the market gives you because if you are greedy and try to squeeze the last penny out of the markets, the markets WILL put you in your place! Emotion #3: Fear The next emotion on the list is fear. Fear is a natural human emotion that we all have. In trading, it’s easy to let fear take over because you can see your profits diminishing in front of your eyes! Here’s the problem with fear: it’s a very strong and powerful emotion that has the power to paralyze you, and cause you to have a bad day — a VERY bad day: You’re sitting in front of your computer all day staring at the “red” numbers — the unrealized losses. Your mind goes crazy because you’re already thinking about how bad your trading account will be when you realize all these losses. But what a difference a day can make. Have you ever realized how one day it looks bad, and the next day everything is green again? Here is what you should do when FEAR takes over: – Step away from the computer. Shut it down! Go outside. Do something else. – Take some deep breaths and relax. – Do not panic, this will cause you more harm than anything else! The market is always changing, it’s just out of our control; so instead of panicking, think about what we can control. Emotion #4: Anger Next on the list of emotions in trading is anger. It’s easy to get angry at the markets because it’s so unpredictable! You can never tell what is going on and when it will change. And why are there always losers? Dang, I should have bought 30 minutes ago… but now the price has gone up again?! Happened to me yesterday: Every single trade that I entered was timed wrong. I could have gotten a much better fill 30 min later! But: anger does not get us anywhere. Anger leads to revenge trading, which can lead to catastrophic losses. Keep in mind: Markets don’t know who you are. Markets don’t care who you are. Markets don’t know if you are in a winning or losing trade. Markets don’t care if you try to push them around. If you try to fight the markets, you’ll lose. It’s important not to let anger dictate your trades! Emotion #5: Frustration The last emotion on our list is frustration. It’s easy to get frustrated with trading for the same reasons that I just mentioned: You can never tell what is going on and when it will change. And why are there always losers? Dang, I should have bought 30 minutes ago… but now the price has gone up again?! Some people react to these events with anger, others with frustration. Frustration can lead to impulsive trading, and that’s not a good thing. The best way to deal with frustration is to take some time out from the markets for a few hours or even days until your head clears up. 2. Understand The Effect of Emotions While Trading In a moment, I’ll share a technique with you on how to control these emotions but let’s first talk about the effect of emotions on your trading. It’s ok to have feelings. It’s ok to feel these emotions — these are HUMAN emotions. The problems start when you ACT on these emotions while trading. As you have seen, each of these emotions is causing a reaction, and none of them is good. Emotions cause irrational behavior… … which leads to impulsive decisions, … which leads to and bad trades, … that often leads to losses or drawdowns. Emotions in trading can be the number one account killer, so you MUST be able to control them. 3. Control Your Emotions By using THIS technique I have been trading for 20 years, and I still feel these emotions. They say you shouldn’t have any emotions while trading, and based on my experience, that’s not possible! The important thing is to make sure that you don’t ACT on your emotions. So how can you control your emotions? Stephen Covey said it best in his book “The 7 Habits of Highly Effective People”: Focus on what you CAN control, and don’t worry about what you can’t control. And if you think about it, there are only 2 things you CAN control: Your Thoughts Your Actions You can’t control what the markets are doing, you can’t control whether Hindenburg Research is releasing a report on a company you’re in, you can’t control when a big hedge fund gets in trouble and has to dump a bunch of positions, but you can choose how you react. Let me give you a personal example: As you know, I am in RIDE . And the position is MASSIVELY going against me. I could be angry at short-sellers, especially Hindenburg Research. I could be frustrated with Lordstowns PR efforts, which suck. I could look at my unrealized loss every day and fear “What will happen it Lordstown doesn’t recover?” I could have a lot of negative emotions around it, and NOTHING would change — other than me getting bitter, and maybe even depressed. So I keep following my plan, which is selling more premium. This week, I will make $1,050 on RIDE , no matter what the price is doing. If it goes up, good. If it goes down… oh well, I can’t change that. I just know THIS: I won’t let emotions dictate my day, and I won’t let emotions dictate my trading. I believe the Serenity Prayer says it best: “God, grant me the serenity to accept the things I cannot change, courage to change the things I can, and wisdom to know the difference.“
TVC:NDQEducation
by rockwelltrading