My favorite trade on the SPY and QQQ from this week

Wanted to walk you through this setup

Hey folks, You don’t need me to tell you that the markets have been a mess over the last few weeks. A Fed meeting compounded by earnings — there’s a lot of uncertainty leading to many fast overreactions. Remember a few weeks ago, when META’s earnings report tanked the whole stock market…   Only for GOOG to post incredible earnings the very next day and send things moving the other direction.   When markets are this confused, one thing that you have to be able to do is read relative strength. The Nasdaq is volatile right now. It is unpredictable. Though it has been the kingmaker for many months, right now, it is in a period of uncertainty…  And it’s been weaker than the S&P over recent months. Just look at the side-by-side…   Strongly correlated, but the SPY has been the stronger index recently. Even so, trying to guess on one or the other, and being correct on direction, is a tough ask right now. But there’s one play I LOVE in these kinds of situations…   The Versatile Pair Trade When two stocks are heavily correlated, and one is stronger than the other, conditions are perfect for a classic pairs trade, what you might have heard me refer to as a Profit Link. In fact, I placed one this week on the SPY and QQQ. The concept is very simple: when one stock is stronger than the other, and they are correlated (in ThinkorSwim’s Pairs Trading tool, which is pretty cool, I am looking for a .80 correlation or better), set up the pairs trade. All you have to do is buy a Call on the stronger stock and a Put on the weaker stock. Late last week, May 1, I placed just such a trade on the SPY and QQQ.  I bought the 24 May $515 Call on SPY, and the $400 Put on QQQ — and I sent this trade alert out to my Profit Links members.    This setup is perfect for volatility. Because if the markets go up, both stocks should go up, and the stronger stock will outperform the weaker stock enough to return a good win. Same is true in reverse. In this case, the markets headed higher, and yesterday, I was able to close both trades.The SPY trade jumped 154.8%, and the QQQ put lost 82%, but net together they made a 36.37% return!  That’s exactly how this trade is supposed to work. Now, pairs trades aren’t perfect, they can of course lose money. I would never suggest otherwise. But these are the conditions they work best in:    1) Volatile markets  2) On strongly correlated stocks 3) Where one stock is seasonally stronger than the other  That was the case with SPY and QQQ last week, and that’s how my Profit Links members were able to close out with a nice win. Hope you found this helpful!  Geof P.S.: If you do want to learn more about how I place pairs trades, and get some of my best uranium stock picks, you can watch this free replay of my recent Profit Links event.

Hey folks,   You don’t need me to tell you that the markets have been a mess over the last few weeks.   A Fed meeting compounded by earnings — there’s a lot of uncertainty leading to many fast overreactions.   Remember a few weeks ago, when META’s earnings report tanked the whole stock market…   Only for GOOG to post incredible earnings the very next day and send things moving the other direction.   When markets are this confused, one thing that you have to be able to do is read relative strength.   The Nasdaq is volatile right now. It is unpredictable. Though it has been the kingmaker for many months, right now, it is in a period of uncertainty…    And it’s been weaker than the S&P over recent months.   Just look at the side-by-side…   Strongly correlated, but the SPY has been the stronger index recently.   Even so, trying to guess on one or the other, and being correct on direction, is a tough ask right now.   But there’s one play I LOVE in these kinds of situations…   The Versatile Pair Trade When two stocks are heavily correlated, and one is stronger than the other, conditions are perfect for a classic pairs trade, what you might have heard me refer to as a Profit Link.   In fact, I placed one this week on the SPY and QQQ.   The concept is very simple: when one stock is stronger than the other, and they are correlated (in ThinkorSwim’s Pairs Trading tool, which is pretty cool, I am looking for a .80 correlation or better), set up the pairs trade.   All you have to do is buy a Call on the stronger stock and a Put on the weaker stock. Late last week, May 1, I placed just such a trade on the SPY and QQQ.    I bought the 24 May $515 Call on SPY, and the $400 Put on QQQ — and I sent this trade alert out to my Profit Links members.    This setup is perfect for volatility. Because if the markets go up, both stocks should go up, and the stronger stock will outperform the weaker stock enough to return a good win. Same is true in reverse.   In this case, the markets headed higher, and yesterday, I was able to close both trades.The SPY trade jumped 154.8%, and the QQQ put lost 82%, but net together they made a 36.37% return!    That’s exactly how this trade is supposed to work.   Now, pairs trades aren’t perfect, they can of course lose money. I would never suggest otherwise.   But these are the conditions they work best in:    1) Volatile markets  2) On strongly correlated stocks 3) Where one stock is seasonally stronger than the other  That was the case with SPY and QQQ last week, and that’s how my Profit Links members were able to close out with a nice win.   Hope you found this helpful!    Geof   P.S.: If you do want to learn more about how I place pairs trades, and get some of my best uranium stock picks, you can watch this free replay of my recent Profit Links event.

ABOUT US:  We believe that the opportunity for financial literacy and freedom belongs to all people, not just those who already have years of investing experience. Prosperity Pub provides an array of educational services and products that will help you navigate the markets and become a better investor. Trading is made simple through our online forum full of trading techniques to give you the best tools to kick-start your investing journey. We offer collaborative webinars and training; we love to teach. No matter the opportunity, we bring together a strong community of like-minded traders to focus on analyzing market news as it’s presented each day. DISCLAIMER: FOR INFORMATION PURPOSES ONLY. The materials presented from Prosperity Pub are for your informational purposes only. Neither Prosperity Pub nor its employees offer investment, legal or tax advice of any kind, and the analysis displayed with various tools does not constitute investment, legal or tax advice and should not be interpreted as such. Using the data and analysis contained in the materials for reasons other than the informational purposes intended is at the user’s own risk. DISCLAIMER: TRADE AT YOUR OWN RISK; TRADING INVOLVES RISK OF LOSS; SEEK PROFESSIONAL ADVICE. Prosperity Pub is not responsible for any losses that may occur from transactions effected based upon information or analysis contained in the presented. To the extent that you make use of the concepts with the presentation material, you are solely responsible for the applicable trading or investment decision. Trading activity, including options transactions, can involve the risk of loss, so use caution when entering any option transaction. You trade at your own risk, and it is recommended you consult with a financial advisor for investment, legal or tax advice relating to options transactions.  Please visit https://prosperitypub.com/terms-conditions/ for our full Terms and Conditions. Unsubscribe This email was sent to penunggangbadai.moneyblog@blogger.com by Prosperity Pub 101 Marketside Ave, Suite 404 PMB 318, Ponte Vedra, Florida 32081, United States Prosperity Pub

ABOUT US:  We believe that the opportunity for financial literacy and freedom belongs to all people, not just those who already have years of investing experience. Prosperity Pub provides an array of educational services and products that will help you navigate the markets and become a better investor. Trading is made simple through our online forum full of trading techniques to give you the best tools to kick-start your investing journey. We offer collaborative webinars and training; we love to teach. No matter the opportunity, we bring together a strong community of like-minded traders to focus on analyzing market news as it’s presented each day. DISCLAIMER: FOR INFORMATION PURPOSES ONLY. The materials presented from Prosperity Pub are for your informational purposes only. Neither Prosperity Pub nor its employees offer investment, legal or tax advice of any kind, and the analysis displayed with various tools does not constitute investment, legal or tax advice and should not be interpreted as such. Using the data and analysis contained in the materials for reasons other than the informational purposes intended is at the user’s own risk. DISCLAIMER: TRADE AT YOUR OWN RISK; TRADING INVOLVES RISK OF LOSS; SEEK PROFESSIONAL ADVICE. Prosperity Pub is not responsible for any losses that may occur from transactions effected based upon information or analysis contained in the presented. To the extent that you make use of the concepts with the presentation material, you are solely responsible for the applicable trading or investment decision. Trading activity, including options transactions, can involve the risk of loss, so use caution when entering any option transaction. You trade at your own risk, and it is recommended you consult with a financial advisor for investment, legal or tax advice relating to options transactions.  Please visit https://prosperitypub.com/terms-conditions/ for our full Terms and Conditions. Unsubscribe This email was sent to penunggangbadai.moneyblog@blogger.com by Prosperity Pub 101 Marketside Ave, Suite 404 PMB 318, Ponte Vedra, Florida 32081, United States Prosperity Pub

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