| | | | NEW MONEY CREW
WEEKLY RUNDOWN Hey traders, Lance Ippolito here! Welcome to Weekly Rundown, where we'll share some of our top trading ideas — and our biggest winners — from the New Money Crew!
Today I want to talk about something near and dear to my heart: options trading. You guys know this is my bread and butter in my Weekly Blitz Alerts and Free Riders trading services. But more specifically, I want to talk about why using stop-loss orders for your options is a terrible idea — they're for losers!
Stop-loss orders are part of proper risk management, and they're designed to buy or sell a security when the stock hits a predetermined price. Once the level is triggered, it becomes a market order.
I know conventional, old-money Wall Street wisdom says putting in stop-loss orders is the best way to protect yourself when the stock market turns against you. And that's fine and all when buying and holding stocks. You should always practice proper risk management.
But here's an example why old-school rules don't always apply…
I had long calls on a stock recently. Those calls were down about 40% from where I bought them. This happens all the time because options are volatile and they can make huge moves either way, seemingly in the blink of an eye.
The reason options prices are so volatile sometimes — especially when the market opens — is because options are not as liquid as stocks. So an option can sometimes show a big loss (or gain) for a few minutes, only to jump back to "normal" levels.
So a few days later when I thought about closing them out and taking a big loss… BANG, the stock rallied 30% on breaking news. The options went up four-fold. So I made a boatload of money!
If I would have used stop losses a couple of days prior, I would have been kicking myself in the butt over closing the position.
Back to risk management… You should only buy options and trade in general with an amount of money that you know for a fact you can stand to lose IF everything goes wrong — it happens! And if you play the options market that way, you don't need stop losses.
In fact, if you're using stop-loss orders on your options, you're probably trading too big. So scale back your orders, and this is important… have conviction and confidence in your trades!
Now, on to some...
BIG Wins!
It was a big, BIG week for my Free Riders Club members, who saw three huge pay days! Free Riders is option plays specific to healthcare and biotech — which are of course super hot and profitable! This service is focused on specific sector catalysts like FDA announcements, Prescription Drug User Fee Act dates, mergers and acquisitions, big news and more.
And we captured gains of 40% on Boston Scientific Corp. (NYSE: BSX), 66% on Eyepoints Pharmaceuticals Inc. (Nasdaq: EYPT) and a MONSTER double-double — a 210% win on CorMedix Inc. (Nasdaq: CRMD) after the underlying stock absolutely exploded about 125% over the past month.
- +40% on BSX (Feb. 19 $38 CALL).
- Entered on Jan. 21 at $1 a contract.
- Exited on Feb. 4 at $1.40 a contract.
We entered this trade after Boston Scientific announced it is buying Preventice Solutions… and boy was the market excited about that! Earnings also came out Wednesday and even though they were a miss, it didn't stop BSX's momentum. This stock showed strong technicals on the daily chart and upside to $40 per share. The stock was at $39.20 by lunchtime Friday, so we nailed it!
- +65.85% on EYPT (June 16 $7.50 CALL).
- Entered on Jan. 5 at $4.10 a contract.
- Exited on Feb. 2 at $6.80 a contract.
This was one of our first two trades this year and it paid off big! We saw large call buying on Jan. 5. Eyepoint recently got a $15.7 million investment from Ocumension Therapeutics, and data was expected by March (hence the July expiration). This was an uncommon move in the options market, with more than eight times its normal volume after a $200,000 bet on July $7.50 calls. This was a riskier play but it worked out to perfection.
- +210% on CRMD (March 19 $9 CALL).
- Entered on Jan. 14 at $2 a contract.
- Exited on Feb. 3 at $6.20 a contract.
Now for the double-double… CorMedix continued its interactions with the FDA in regard to the New Drug Application (NDA) for Defencath, which prevents catheter-related blood stream infections — big yikes. CRMD saw massive insider buying over the past year and looked to be setting up for a rally into the PDUFA date. Boom, nailed it!
Be sure to check out Free Riders Club and Weekly Blitz Alerts for the potential to see more big winners like this!
And if you have a big score you'd like to share with your fellow New Money Crew readers, email us your screenshots of the trade and/or any details you want to share at wptestimonial@gmail.com, and we'll celebrate them here!
Tired of Missing Huge Stock Jumps?
If you've ever found yourself saying, "I wish I'd gotten into that stock earlier"... today might just be the day you retire that phrase.
Legendary trader Adam Sarhan has developed a system that can alert him to stocks getting ready to experience huge jumps in their share prices.
Invest in these companies before their shares soar… and huge gains are sure to follow.
According to Adam, the number of stocks hitting "major gain territory" skyrockets during earnings season. And considering hundreds of companies are getting ready to report Q4 earnings this week, there's never been a better time to grab these huge windfalls.
Here's how to do it.
How to Play Gold's Consolidation
Live Trade Profit's Josh Martinez is back this week with market analysis — and his professional strategy — on gold futures, which trade at $10 a tick, and $1 a tick for micro contracts. Josh likes to look at large daily timeframes to figure out where gold is headed next.
Dating back to May 2020, so nine calendar months, gold saw a big, big rise and then a long consolidation period. We just formed a small valley after a big recent peak, with the next daily high pushing up past the previous high, and then a daily low that was higher than the previous daily low — a low, a high, a higher low, and then a higher high.
Josh's chart work shows if gold maintains its current position, the data says it should continue an upward push. We had about two weeks with similar movements, and we want to use that consolidation to our advantage using one-hour time frames to anticipate an overall bullish push.
And why does he expect a bullish push? Because, looking at trend lines, gold has been making a U-turn higher at a certain point every time — and this is dating back nine months.
The pro trader's mindset on this pattern is simple: If you make the plan to trade this U-turn and accept that you'll win every trade except the last one, when it breaks below the trendline, you will have the confidence to continue to win. It could be three, four, fix, six or more wins in a row — who knows — before you lose the trade.
Risk management is crucial to this strategy. You have to invest the same amount every time and not get cocky after reeling off five or six wins in a row, and then putting down a larger amount. Because chances are, when you decide to go big, that's the one that will lose.
Executed properly, this is a sound strategy to trade gold futures like the big boys.
Signing Off
If you're looking for more compelling trade ideas and stock market musings to read and help you prepare for what lies ahead, here's what other experts at WealthPress are saying:
Lance Ippolito
New Money Crew |
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Disclaimer & Disclosures: The information in this email is intended for informational purposes only and does not guarantee specific results as there is a high degree of risk involved with trading. Also, our traders are real traders and may have financial interests in the companies discussed. Please see our Terms and Conditions for more information.
Past performance is no guarantee of future results. There is a high degree of risk involved in trading. For our full disclaimer, visit here.
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