The Worst Options Trade You Can Make

[Option Beast]( 03/13/2021   |   [View in browser]( --------------------------------------------------------------- [The Worst Options Trade You Can Make]( Option traders are drawn to volatility like moths are to flames. Shares which move around readily thus fetch very high premiums. Option buyers "pay up" to own calls or puts on those stocks. Option sellers, also called option writers, love high premiums as they're getting paid well for selling volatility. Big premiums can be seductive, though. Traders are often tempted to play high beta names simply because the option prices move around so freely. The key to any good equity option trade is knowing what you believe to be that stock's true value. [More...]( SPONSORED CONTENT [65 Year Old Grandma Humiliates Wall Street's Top Traders...]( They laughed when this backwoods grandma taught herself how to trade options for income. But she's got the last laugh now... and she's sharing her #1 tip for FREE! [Click here for instant access...]( [REFLECTIONS... Recovery Liftoff by David Sager](#) U.S. stocks surged Friday, ending a rambunctious week. The economy is heating up, good news abounds. Investors continued to rotate out of big technology shares and into cyclical sectors that lend themselves and thrive in a recovering economy. As usual the tech heavy Nasdaq Composite declined 2.1%, its third consecutive week losing ground. The index is down now 8.3% from its February 12 high and stands at 12,920. The S&P 500 rose (indicative of the rotation) 0.8% for the week to 3841 as advances by energy, financial and industrial sectors offset the declines in technology and 'consumer' discretionary groups. The Dow Jones Industrial Average which is less oriented toward fast-growing technology stocks advanced 1.8% to 31,496.30. The off forgotten low key Russell 2000 braggs a total return of 11.2% this year, well ahead of the S&P 500's 2.6% total return This index closed up 45 points on Friday. Tom Plumb, president and portfolio manager at Plumb Funds, said, "this past week has been a classic correction in growth versus value. But it doesn't mean that it portends something much greater." He continues, "in recent weeks stocks have stumbled as the climb in bond yields called into question whether low interest rates, which propelled valuations higher for much of the past year, will continue." Yields which rise as bond prices fall, have recently rallied in response to expectations of a quickening pace of growth and inflation as the economy reopens from the coronavirus pandemic. February jobless rates declined to 6.2% as employers added 379,000 workers in January and February in hiring at restaurants and other hospitality businesses. It created the best monthly job growth since last fall. In the coming months we will hopefully see more positive numbers of hired workers in many fields. As the 10 year note rose to 1.55% this past week, the highest since February 2020, this surge in yield gives rise to expectations that Powell, in his comments in a Wall Street Jobs Summitt, would indicate that the Fed plans to 'tamp' rates down. Senator Elizabeth Warren and a few of her fellow Democrats want to tax a fraction of the $16 trillion in net assets held by more than 100,000 American families. Warren and her colleagues would have these ultrarich households pay the government a 2% yearly carrying fee on any wealth above $50 million, with a surcharge applied to any wealth above $1 billion. The first $50 million would be exempt. Compliance would be enforced by auditing each ultrarich family about once every three years. While the proposal might not make it past the Senate, the basic idea is surprisingly popular, with roughly two thirds of Americans--including half of self-identified Republican voters-- saying they would support such a proposal, according to a poll conducted last summer by the left-leaning Data for Progress. The proposed tax might encourage the ultrarich to reallocate into high-yielding risky assets, thus providing more resources to start-ups and other growth businesses. Interestingly about a third of all assets owned by the ultrarich are invested in low-yielding deposits and bonds. As Mathew Klein, of Barron's, so aptly put it, "like all taxes, the proposed tax is a form of theft." The New Wave Of EV Stocks (Electric Vehicles).....a plethora of companies, from start-ups to global giants are 'all in' launching electric cars and trucks, and anything that has wheels. The big question....can they deliver? Tesla has delivered a remarkable 500,000 electric vehicles in 2020, setting the bar very high for all challengers, as the No. 1 by market cap in the auto industry. Many have not yet delivered a single vehicle. Giants like General Motors, Ford and Audi have openly predicted 'all electric' by 2035, planning scores of new models and configurations. Battery developers, and charging networks are being aggressively innovative and working feverishly to satisfy future demand. Dan Ives, a Wedbush analyst, and Tesla Bull, said in a March 4 note that "the EV party and transformation is just beginning," adding that a "green tidal wave" is on the horizon as EV adoption speeds up. In an interview on December 29, Ives suggested it's not just going to be Tesla's world. "It's an ocean of opportunities," Ives told IBD, "There's room for more than one boat." RUMBLINGS ON THE STREET Edward Park, chief investment officer at Brooks McDonald, WSJ "It is all about the bond-yield moves. It is all about Jerome Powell," said Mr. Park. "There is a huge amount of uncertainty in the market at the moment as whether the inflation that is widely expected in the short term is transient or whether it is more sustained." Lydia Boussour, Senior economist at Oxford Economics, WSJ "People are going to travel more, they're going to go back to restaurants and bars, they'll go back to the gym- all the things they basically were not able to do before the pandemic. This is where you will really see a burst of spending." Cliff Hodge, chief investment officer at Cornerstone Wealth, WSJ "There's volatility to be expected after we've had a bit of a sell off, a bit of a rocky week," said Mr. Hodge. "It's not surprising that we're bouncing around." Michael Colas, co-founder of Data Trek Research, Barron's "Powell knows exactly what he is doing. He's letting the market know that higher yields don't bother him, especially with an additional $1.9 trillion in stimulus winding its way through Congress to keep the economic recovery going. He knows that this setup will make the 10 year yield more volatile than ever before. Dramatic changes in the Fed policy always drive changes in equity investor preferences and therefore what sort of stocks work," Colas explains. Warren Buffett, Berkshire Hathaway, Barron's "Fixed-income investors worldwide whether pension funds, insurance companies, or retires--face a bleak future....bonds are not the place to be these days." [GameStop Prompts U.S. to Consider New Rules for Options, Shorts]( The GameStop Corp. trading frenzy has prompted U.S. regulators to consider new rules for everything from short-selling to investing with options and gamification, indicating watchdogs are just getting started in responding to the market mayhem. In a letter to Senator Elizabeth Warren, acting Securities and Exchange Commission leader Allison Herren Lee ticked off several rule changes that the regulator should "seriously consider." They include toughening requirements for brokers that offer options trading, new demands for brokers that sell their customers' stock orders to other firms and stepped up disclosure standards for hedge funds and other traders who bet against shares. [Article continues...]( [The Standard Emergency Savings Advice Was Wrong - How Much Do You Really Need?]( The standard advice on emergency savings has always been three to six months' worth of expenses or income. That was a tough-if not impossible-hill to climb for millions of Americans even before the virus when the economy was roaring. Then, COVID-19 proved that even that wasn't nearly enough-we're now a full year into the pandemic. So, what now? Should financial professionals tell millions of people living check-to-check to sock away 12 months of income versus the suggested three to six months? GOBankingRates asked the experts how average people can pivot toward financial security with a realistic plan to build a cushion of cash in the post-pandemic world. [Click to continue reading this article...]( [Here's What Adults in Their 60s Have Saved for Retirement -- How Do You Compare?]( The coronavirus pandemic has taken a financial toll on a lot of people. Last year, millions of Americans lost their jobs, and as a result, many had to cut back on retirement plan contributions and focus on making ends meet. Meanwhile, some savers had to dip into their retirement accounts to pay the bills -- an option that was available to them without penalty thanks to the CARES Act, the sweeping relief bill that took effect in March of 2020. In fact, a recent survey by Personal Capital reveals that almost 24% of Americans did, in fact, decrease retirement plan contributions during the pandemic. But in spite of that, many savers managed to close out the year with a decent chunk of savings. [More here...]( SPONSORED CONTENT [This Money Trade Appears Between 9:30-10:45am Almost Every Day...]( If all you did was focus on this one simple trade you could make between $300-$1,100 per contract each day you trade. Don't make trading harder than it has to be. Keep it simple and walk away with daily profits. Get your free guide that shows you how to spot this, and when to enter & exit. [CLICK HERE for instant access.]( --------------------------------------------------------------- [Option Beast]( Send this to a Friend. [Click here.]( | Not a Subscriber Yet? 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