Is risk back on?

The price action in the broader stock market during the second half of last week and continuing into this morning suggests this is a strong possibility. Meanwhile, the action in the dollar and metals space offers a sneaky way to play this shift.

Sometimes, we play 3D chess to look for opportunities in one place when everyone else is distracted by the headline-grabbing moves.

This is the video recording of September 24th 2021 Weekly Jam Session with Sean McLaughlin.

The ASC team did their monthly conference call this week, where they rip though a million charts and highlight the things we need to pay attention to -- the trends, the divergences, and particular setups in stocks that we like.

The blizzard of information they throw at us can be overwhelming at times. This is why you come to me to cull through it all and find my favorite setups that can be played with options.

Today's pick comes out of that call and its focused on the small business side of things.

On September 22nd, Sean and Strazza hopped on a Twitter Live Stream to discuss a recent trade idea for All Star Charts Options Members.

Here's the play:

"I like an $IWM November 200/205/235/240 Iron Condor for an approximately $1.80 credit. This means I’ll be short the 205 puts and 235 calls, while protected by the 200 puts and the 240 calls. This is a defined risk trade where the most I can lose is the maximum possible value of the spread (distance between short and long strikes — $5.00) minus the credit we receive at initiation ($1.80) which equals $3.20."

To learn more about the trade and the thinking behind it, click below to watch a replay of the Live Stream.

With volatility rising this week, I've been on the hunt for opportunities to "safely" sell some premium.

While there is no such thing as a sure bet in the markets, selling elevated premium in rangebound securities is one of the closest things we will find to that idea.

I was chatting with my partner Steve Strazza this morning and when I told him what I was looking for, he immediately responded: "Oh -- you want $IWM. That is the very definition of sideways action."

Sure enough, he's right. And upon closer inspection of the options chains, there is some good premium offered for sale if we're willing to go a little further out in time.

The game plan in the markets over the past several quarters has been to buy the dip whenever the S&P 500 approached its 50-day moving average of prices.

So naturally, I spent the weekend thinking about some long trades that I wanted to put on today -- thinking the same old game plan was likely to continue.

Then I woke up to S&P Futures showing the largest gap down opening we've seen in a while and $SPY indicated to open significantly below its 50-day moving average for the first time in seemingly forever.

In other words, the market was telling me to rethink my bullish ideas.

Another 20 year base breakout? This is the second one we're putting a trade on in this week! Maybe the market is trying to tell us something?

I have to be honest, when I first pulled this ticker up, I thought it was a Men's suits maker. But when I learned it's involved in the intersection of Artificial Intelligence and Semiconductors, the sex-factor went up for me.

Let's get right to it...

On September 15th, Sean and Strazza hopped on a Twitter Live Stream to discuss a recent trade idea for All Star Charts Options Members.

Here's the play:

"We’re buying $CSCO January 70 calls for approximately 23 cents. These options are priced as a long shot and we’ll be treating it as such. I’m fully prepared to lose 100% of my capital on this trade if $CSCO doesn’t make the move we need. So I’ll be sizing my position accordingly.

But if it goes our way, we should get plenty of opportunity to take our original risk off the table along the way. My best practice is to sell half of my position when the value of the options have doubled. And I will do that in this case. Then I’ll hold the rest, looking for the big move.

If $CSCO gets to our 74 price target, those 70 strike calls will be worth at least $4.00 — probably more, depending on when that price is reached. $4.00 per contract would be 20x what we originally paid. YAHTZEE!"

This is not something we do often -- usually because these types of opportunities don't present themselves frequently. But we've identified an under-appreciated potential for a 20x gain on our invested capital if the markets cooperate.

Its the perfect storm of a megacap stock emerging from an long base, options flow showing people are starting to position for "something" and an ASC price target that doesn't appear to be priced in by the crowd.

Of course, part of the reason for the elevated options activity is due to an "Investor Day" event happening today, but the action still has been raising some attention.

As is often the case, the Labor Day Weekend has come and gone and some volatility has been reintroduced to the marketplace. And I say: "Welcome back!" with outstreched arms. Volatility = opportunity. Let's get after it.

With the rising volatility, we're seeing premiums start to pump up in options land. When this is the case, I always start hunting for some delta-neutral credit spread opportunities.

Today's hunt has yielded an excellent candidate with clearly defined levels for us to lean against. 

This is the video recording of September 10th 2021 Weekly Jam Session with Sean McLaughlin.

The big indexes offered us a little pullback this week which has been helping us identify the true standouts -- the stocks that are holding up best in a down tape. We're all about relative strength at All Star Charts as it is one of the most reliable indicators for us. And true leaders really identify themselves when they are swimming against the current while markets are sliding.

So on days and weeks like this, we're paying very close attention to the strongest sectors and keying in on the strongest stocks to see how they react.

Today, one those names is in the Capital Markets space where we're seen tremendous strength this year.