We're buying the $CVX January 2024 150-strike call options. Yes LEAPS!

Check out our short video with the thought process behind this trade:

[10/19/23: updated stop to 155]

We're taking a Leap here.

The overwhelming majority of options trades we put on at All Star Options tend to be structured in a way to participate in moves that should take place within 2-8 months. The shorter duration trades are usually trades where we are net short premium (naked puts, short strangles, bear call spreads, etc), whereas our longer-term trades tend to be ones where we are net long premium at attractive prices (in volatility terms).

Today, we're doing something we've never done here. We're making a long-term bet utilizing LEAP options.

"LEAP" is an acronym for Long-Term Equity Anticipation Securities. Essentially, this means we're taking a position in options that have greater than a year until expiration.

If you were on the @allstarcharts twitter SPACES chat this morning (every trading day at 11:30ET), you heard us riffing on today's trade.

I was chatting with an All Star Options member this morning and he asked me a very insightful question:

“Sean, I’d be very interested in your thoughts on why you choose not to make a trade in certain setups?”

He went on to elaborate that he’d like to know the things I look for that are possible “red flags” that prevent me from pulling the trigger in otherwise good stock setups.

The overwhelming majority of trades I put on for All Star Options subscribers are in stocks that the All Star Charts team has identified as stocks we want to be in (either long or short).

The most common reason I won’t pull the trigger is

...And trading volumes are particularly good for the trading exchanges that make it all happen!

With the markets whipsawing back and forth to start the year and trading volumes rising all over the place, the exchanges that extract fees for every stock share, futures contract, or options contract that trade at their venues are seeing their revenues rise.

Couple this with some strong relative performance in the stocks, and we're setup for a very nice bullish move -- should we get it.

Today's trade is in a one such name that facilitates all kinds of trading.

For anyone that joined me, JC, and Strazza on the Twitter Spaces this morning, you heard us scratching our heads on what to trade next.

In this sloppy tape, there just aren't any real compelling opportunities we can find worth getting aggressive with. When the best idea on the table is "buy $QQQ above 350," then you know we're struggling for good directional bets.

But that's ok. We options traders don't just need directional markets to make money. We can take advantage of sideways action too!

And that's what we're going to continue to do with today's trade.

We're continuing the theme of monitoring relative strength in this tricky tape. The next leaders if/when a bull market resumes are revealing themselves now. Are you paying attention?

One of the names that is holding up relatively well recently, and one that also appears in our recent Follow the Flow report is Qualcomm $QCOM.

This week when the broader indexes printed their recent lows, $QCOM tested the low of a the range coming out of its breakaway gap last November and held. This is important.

I joined JC and Strazza today during their daily Twitter Spaces brainstorm and we got to kicking around ideas of how we want to play this market.

When prompted, I voiced my opinion that anything we do in the options space right here should involve being sellers of options. Premiums are elevated pretty much across the board. So whatever we do, let's get a tailwind to help us along. And for me right now, that tailwind is mean-reversion in options premiums.

We never know when premiums will trend back to normal, but we do know that they always eventually do. So we must position ourselves accordingly.

After kicking around a few ideas, collectively we agreed it's best to err in a household name that is unlikely to kill us if we get it wrong.

There you go.

I wrote that headline to save you the trouble of turning on your TV or following your favorite fear mongerer online. You're welcome.

Unless you've been lost in the wilderness for the last two weeks (not a bad place to have been, btw), then you no doubt know the bulls are currently in trouble.

The fake-out breakout in the Russell 2000 $IWM has turned into a full-blown route, the S&P 500 is testing levels last seen at the end of September and early October, and $VIX has printed the highest levels of the year. There's not a lot to be optimistic about right now -- especially if you're holding a bunch of long positions that are at or near stop-out levels like I am.

I got stopped out of a bunch of positions last week, two today (a long call spread in $STX and a short strangle in $XLK), and a couple more might get exited tomorrow if things don't stabilize here.

Into this maelstrom, we've been dialing back putting on new positions. During last week's holiday-shortened trading week, we only put one new position on -- and that may have been one too many ;)

We're putting on an $SMH March 265/270/320/325 Iron Condor for an approximately $2.15 credit.

This means we’re short the 270 puts and 320 calls, while protecting our position $5 away on both sides with long 265 puts and long 325 calls. We’ll be doing the same number of contracts at all four strikes to keep the risk even.

Check out our short video with the thought process behind these trades:

While the US Stock Market has pulled back a bit this week, we've seen $VIX pop its head back up above 23 and print its highest levels in a month. And this isn't entirely surprising given that the highly watched Russell 2000 $IWM has been struggling to hold on to its yearlong support level of around 210.

But has the "all-clear" signal for the bears fired? Is it time to pile in short? We're not convinced yet.

Meanwhile, we've seen some pullbacks in semiconductors stocks we own ($NVDA and $MU most notably) that may get us stopped out soon. But when we zoom out to the bigger picture, as seen via the $SMH Semiconductors ETF, we see that we've been in a range for quite some time now. And even if we'd lose the support of this recent consolidation range at around 290, we can expect the 270-275 zone to offer a new level of support:

We're selling a $NVDA February 260/240 Bull Put spread for an approximately $4.75 credit. This means we’re in the regular February monthly expiration options and we’re short the 260 puts and long an equal amount of 240 puts to define our risk.

Check out our short video with the thought process behind these trades:

The V-Bottom is back! (At least as of the time of this writing). What a bounce stocks have seen off Monday's nadir.

Have we stuck the landing and its back to new all-time highs for the broader indexes soon?

Time will tell. But the short term bet we're making today is that Monday's low will hold at least for a couple weeks. And today's trade in a leading stock in a leading sector reflects this stance. When in doubt, stick with the strongest names in the strongest sectors, right?

So that's brings us to Nvidia $NVDA.