Futures were slightly lower when the overseas markets opened and we mentioned yesterday we had a nervous feeling about today’s nonfarm payrolls report. We closed 2 calls option trades this week because we got a clue on Wednesday the bears had a good chance of cracking support.
We showed our subscribers in our chart work the S&P was in serious danger of falling below 1,300 and we added 3 put trades this week to take advantage of another leg lower.
Although we didn’t predict it or put it in writing, we had a feeling nonfarm payrolls had a chance of coming in below 100,000. The suit-and-ties were looking for a print of 150,000 and were mortified when only 69,000 jobs were added for the month. Unemployment ticked up from 8.1% to 8.2% but we have said the real number in America is in the mid-teens.
Dow futures were already down triple-digits and doubled on the news.
We alerted our subscribers of a possible trend change in late March and we have mainly used put options since. While May was a horrible month for Wall Street, we are happy to say we had another incredible month as well as our subscribers.
We closed 18 winning trades in May with 6 triple-digit winners. We are on an 18-trade win streak since mid-April and we have closed 34-out-of-35 winning trades since March.
Some of our winners include +576% on Green Mountain Coffee Roasters (GMCR, $22.73, down $0.87) put options, +167% on Joy Global (JOY, $26.22, up $0.36) put options, +172% on KLA-Tencor (KLAC, $44.38, down $1.35) put options, +119% on the PowerShares QQQ Trust (QQQ, $60.74, down $1.32), +113% on Coinstar (CSTR, $59.14, down $2.29) and another KLAC trade that returned 144%.
Needless to say, we have been in a zone.
We also find it an insult when the talking heads and Wall Street “pros” tell you to stay out of the market or the game is rigged. What a bunch of hogwash.
For the investors singing the blues because they got Facebook-ed (FB, $27.92, down $1.68), they should be learning how to protect themselves as they easily could have bought put options.
The original IPO and share offering price were fine and we seriously were thinking of buying Facebook shares for our Weekly Wrap – until everyone got greedy. Once the offering price was raised AND the number of shares, the stock instantly became overvalued.
Investors could have shorted the stock at $45 but we didn’t like the idea of putting up $4,500 (in a hectic market) to short 100 shares. Instead, we said we would wait for the options to list but this was an alternative until then.
We have profiled Facebook options all week on our Watch List and although we haven’t pulled the trigger on a trade, if we had bought the stock when it went public we would have sold calls against our position or we would have bought some put options.
We profiled the June 30 puts (FB120616P00030000, $2.70 up $1.00) in our Tuesday midday update which were going for $1.75 at the time. Yesterday, when Facebook traded down to $26.83, those put options could have been sold for $3.50 for a 100% return. Bingo, stop whining.
This is the power of options and it is one of the reasons we started this website 5 years ago to prove the market isn’t rigged and that the “little guy” does win. It just takes a lot of homework, a lot of research, and a lot of quick trading.
We don’t have exact figures but we would say over 80% of the investing public, and probably half of the Wall Street brokers, have NO CLUE on how dynamic options can be. Most of them don’t do homework, don’t read charts, and fail to think outside-the-box.
This is why you have us.
Currently, the Dow is down 221 points to 12,172 while the S&P is lower by 260 points to 1,284. The Nasdaq is tanking 65 points and is at 2,762.
We continue to tell our subscribers you can make just as much money in down markets as you can up markets so don’t be nervous and certainly DON’T pull your money out of THIS market. We continue to tell you this is one of the best years we have seen to make some serious profits and we continue to feel the back half of the year could be just as explosive.
Again, we closed 18 winning trades in May with 6 triple-digit winners. We are on an 18-trade win streak since mid-April and we have closed 34-out-of-35 winning trades since March.
We will leave it there on that note as we have a number of trade updates to cover. Subscribers, check the Members Area for the juicy details.
We will be back Sunday night with our Weekly Wrap so until then, have a great weekend everyone!