Fasten Your Seat Belts For The Final Countdown

US Presidential Election 2020 campaigns are in the final phase now. Get ready for the market volatility and use options for the opportunities at the same time.

Weekend is usually when I set aside certain hours to prepare for the upcoming week and review trading ideas. Also a time to review what worked and what didn't work. I strongly believe that Success is not a milestone, it is a journey and a constant evaluation, retrospect is necessary for a greater future.

So, how do you do this constant evaluation? What process do you use?

As I look forward to the coming week, here are some key pointer that we need to keep in mind:

  1. Markets will continue to experience volatile move due to upcoming US elections. However, Oct 22 clearly stands out since 3rd presidential debate is scheduled for that day.
  2. But more importantly, Fed Chair Powell will be speaking on Monday 19th October and I am sure that's bound to fluctuate US stock markets. 
  3. S&P 500 closed below pre COVID-19 high. In fact, India's NIFTY50 is also trading below preCOVID high and unless those levels are clear, I feel Bulls have to rest.
  4. Tech sector is taking a partial hit, at least momentarily so market leadership might change in the coming days (at least short term). Amazon (AMZN) and Fastly (FSLY) comes to my mind. In fact, I just shared our telegram channel (almost real time), how AMZN dropped almost $100 going into the market close on Friday.

Even though we might want to believe that stock market is doing extremely well this year, you might be surprised to know that leadership is limited to only a handful of stocks (or say Nasdaq-100 in general). Gold, followed by US Bonds are nicely up for the year in 2020.

Among all this backdrop, I also noticed some speculative options activity in Concho Resources (CXO) with Bullish bets amounting to over $1.8million in Jan21 call options which will only be profitable if the stock is above $61.94 on expiration (Jan 2021) or start rallying next week onwards. I did take a Bullish position using the same call action. I am attaching risk profile, in case you would like to model and construct a Bullish trade yourself.

This is just one of the hundreds of trade set-up where options can be used to speculate on a underlying position without directly purchasing shares. 

Oh by the way, if you are new to options, I have a good news for you. I have just launched an options beginners program. Yes, finally an options trading program for complete beginners who have never traded stocks, options or any other financial instrument before. If you want, you can join here for a very special pricing.

Earning season is picking up pace and hundreds of companies are scheduled to announce earnings during coming weeks. I am watching IBM and INTC with keen interests for potential opportunities.

What's your favorite options trading strategy to trade corporate earning announcements? Do you have a company in mind and a trade idea you would like me to review? Post that in the comment section below and I will be glad to share my thoughts. 

Whichever way you decide to trade in the next 2 weeks, trade carefully. This may just be one of the best times to use options to speculate in your desired direction vs investing significant sums in going long/short the underlying asset.

Happy Trading.

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