New Trade And Dollar General Update
Unofficial Trade Update
Hello Smart Option Sellers! Dollar General (DG) Much ado about nothing. Unfortunately. DG released earnings this morning, and at first look, all the numbers seemed real positive. I thought we'd see a pretty good jump. In pre-market trading (you can trade before the market opens) DG stocked traded as high as $77.11 per share. As we moved closer to the regular opening, the stock started to sell off and opened with practically no change - the worst-case scenario that I mentioned yesterday. If you're looking to play an earnings bet, the last thing you want is no movement. You need a big jump. So far this morning in the regular session, the stock has traded in a range of $71 on the low to $75 on the high. That's not enough in either direction to give a profit on the strangle. My suggestion to anyone who bought in - might as well hold until tomorrow to see if the stock makes a surprise move in either direction. As of now, both the call options and put options that were part of the trade are worth pennies at best, if at all. In order to make a profit using the strike prices given in yesterday's alert, the stock has to trade either above $78 or below $67 to cover the costs. If it moves there, you can certainly sell the options to lock in potential gains. If it doesn't, the options will just expire worthless and be removed from your account. As I mentioned, if you want to play the game, keep the costs small as you'll have more losing tries than wins. But, it's still sort of fun, right? New Put-Sell One of the biggest issues facing modern society today is the subject of cyber security. As we move towards automation, using mobile products, and transacting our purchases and banking activities online, we are exposing ourselves to cyber thieves. We all love the convenience of modern technology, but there's a price that goes along with - security. I'm sure you've all heard about major corporations and governments being hacked by cyber criminals, and you may have even been a victim yourself. Heck, I've had to change my credit card numerous times due to hackers. It's a real pain. With the onslaught of the IoT (Internet of Things) movement, practically everything you'll own in a few years (if not already) will be connected to the internet. We're talking TVs, refrigerators, home alarm systems, cars, major appliances, thermostats, etc. Your whole house will be connected. Super convenient and cool, yes? But it also increases the opportunity for cyber thieves to access your home network and start snooping through your stuff. Not cool. Since there's no doubt that the wave of the future is mobile computing and internet-connected everything, I'm also convinced that cyber security is needed more than ever, and it will be one of the best investments for the foreseeable future. One of the best ways to get involved with the biggest and best cyber security companies out there is through the PureFunds ISE Cyber Security ETF (HACK). This exchange-traded-fund contains such companies as: Fortinent (FTNT) Palo Alto Networks (PANW) Checkpoint software (CHKP) Symantec (SYMC) These are some of the biggest names out there. And investing in this fund can give you an opportunity to profit from what I believe will be one of the biggest trends of the foreseeable future. HACK Currently, HACK trades for $29 per share and has seen its share price steadily rise since early 2016. Now, the ETF has only been in existence since late 2014 - not a long track record yet, and I typically don't like to get involved with investments that are younger than 5-10 years old. But, many of the companies within the ETF have been around a long time, so I feel very confident in getting involved with the play. And with an ETF, of course you get the benefit of multiple securities. So if one company has a bad quarter, the others are there to help stem the fall. We're going to sell a put option on HACK today, but in my opinion, it's also a good long-term investment via outright stock purchase or via the DITM call-buying strategy I wrote about in a previous alert. Take your pick. Here's what you can choose to do: Sell (sell-to-open) the HACK September 2017 $22 put options for a limit sell price in the range of $.35 - $.45 per contract, GTC, as an opening transaction (sell-to-open). Currently, these put options have a wide bid/ask market of $.05 bid/$.75 offer, but the fair value is right in that $.35 - $.45 range. Not sure why some of our recent trades have such wide markets, but fair value is in the middle. This is a popular stock, so it would make sense that the options would be a little more liquid with tighter spreads. It's not a concern for me because we still want to get involved with the play. Remember the rules: 1. We are going to sell these put options as our trade. We are not buying them. 2. Do not use a "market" order. Only use "limit" orders. 3. Do not sell for anything less than $.35 per contract. The best course of action is to start your initial offer price at $.45 per contract. If no one bites, you can move your offer down incrementally until you get to $.35 per contract (no lower!). You are always free to choose a different strike price if you'd like, but officially, we are sticking with the $22 strike as our official play. Get those trades in there and let me know if you have any questions. Contact us here. Regards, Lee Let's Grab That Cash!
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