Hi Antagonist members,
Here are the full details of the trades that I discussed in our premium member chat.
As a reminder, whenever I’m considering a trade, I announce it via the chat function in the Substack app. Be sure to turn on notifications so that you don’t miss an alert.
I use the chat feature for 3 reasons:
Many people only check their emails a couple times per day. The app (with notifications turned on) ensures you see my trade alerts in real time. You’ll know when and why I’m considering a trade before I even place it. This lets you conduct your own research to see if a similar trade is right for you.
You likely receive dozens of emails per day. The chat reduces the number of messages you receive from me without sacrificing content.
The chat gives you the opportunity to post questions or comments.
For the rationale behind each of these trades, refer to the chat thread that I linked to above.
Trade #1: Bull Call Spread Option—United Airlines (UAL)
The dollar amounts represent 1 contract. If you buy more or less than that, your max profit and loss will change accordingly.
Bought (to open) a bull call spread option with an expiration date of Feb. 2.
Stock price at the time of my trade: $38.95.
Bought the $38.50 call and sold the $39 call.
Trade cost and max loss: $25.
Max profit: $25 before commissions and fees.
Profit target: 88% in 14 days.
I also placed a good-til-canceled (GTC) order for $0.47.
Trade #2: Bear Put Spread Option—iShares 20+ Year Treasury Bond ETF (TLT)
The dollar amounts represent 1 contract. If you buy more or less than that, your max profit and loss will change accordingly.
Bought (to open) a bear put spread option with an expiration date of Jan. 26.
Stock price at the time of my trade: $93.93.
Bought the $94 put and sold the $93.50 put.
Trade cost and max loss: $22.
Max profit: $28 before commissions and fees.
Profit target: 114% in 7 days.
I also placed a good-til-canceled (GTC) order for $0.47.
Before you follow any of my trades, read this!
If you’re new to options or need a refresher, check out these free guides. And feel free to ask questions by replying to this email, leaving a comment, or posting in our discussion thread.
If you’re going to follow my trade, you will probably see different prices than I paid. That’s because stock/ETF prices constantly move.
If you can get the same strike price for the same premium (or lower) that I paid, that’s great. Often times, however, you can lock in an even better strike and/or premium. That will occur if the underlying stock/ETF price is different from when I entered the trade.
If that happens, it’s always best to get a lower strike price for a call or a higher strike for a put. I typically buy the leg that is ITM and sell the leg that is OTM. You can use that to guide you as you select your strike price. This will usually result in your getting a better strike price than I got but for a similar premium.
I do NOT recommend buying OTM calls or puts even though the premium is cheaper. You want to put the odds more in your favor, not less. Also, try not to pay more than $0.60 to open your $1 spread option ($0.30 for a $0.50 spread).
Lastly, if the underlying stock/ETF increases (for a call; decreases for a put), you likely won’t be able to get the same strike that I got for the same premium. It’ll be much more expensive.
If that’s the case, just wait. The stock/ETF may change in the next day or 2, and you can open the option then. If the price doesn’t move in the direction you want, just let it go and skip this trade. Don’t worry. There are always plenty of trades available. NEVER chase a trade out of FOMO (fear of missing out).
And as always, do your own research before making any investment and trading decisions. Everyone’s situation is different, and I am not a financial advisor. I simply share research with you to help you make your own decisions (see full disclaimer below).
Happy trading,
Jason Milton
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