The volatility, the fear, the indecisiveness of traders has wreaked havoc on the markets. Fear is running rampant, as the Dow rockets one day, only to scream lower the next.
The stock market’s recent sell-off and sudden snap-back rallies – including a 2,000-point drop – served to vindicate my strategy of waiting on the sidelines, avoiding the incessant volatility of a portfolio heavily weighted in equities…
I knew very well this would be one of the most volatile years on record, given energy wars, currency crises, geopolitical shocks, upcoming elections, potential government shutdowns, record highs on the markets, and the end of easing.
Traders and investors alike are scared…
And they should be.
While there’s hope of a bearish gap refill around 17,000 on the Dow, there’s no telling what comes next.
But that doesn’t mean opportunities don’t exist. They do.
We’ve proven that many times over the last several months. Our last trades on Aflac (AFL) and Zumiez (ZUMZ) are proof. In fact, after buying ZUMZ stock at $14.35 and the ZUMZ November 15 calls at $1.10 we’re already seeing nice gains.
The ZUMZ call last traded at $1.60 on Friday, as the stock pushes above $15.65. Consider selling half of both ZUMZ positions if you’re happy with current gains.
As for new trading opportunities, consider Rite Aid (RAD) stock and call options.
The stock has become a bit oversold on RSI, MACD and MFI in recent weeks on earnings. But as we move into flu season, I expect the stock to appreciate to at least $10 a share by the close of the year. Historically, stocks like RAD and CVS have a historical tendency to pick up steam on flu season catalyst.
I expect no different this year. That said consider buying to open the RAD January 2016 7 call up to 80 cents. Buy a small number of contracts, perhaps up to 10. There are still a great number of bears in position. But I believe reward outweighs risk here.
This call in particular carries a delta of 0.5150 at the moment.
Buy it… Forget about it. We’ll track it for you.
All my best… Take good care,
Ian L. Cooper
Rapid Retirement System