In light of DowDuPont's $DWDP recent spinoff of Dow $DOW, it makes the maths a little more complicated on our trade.

Here is the press release from the OCC: https://t.co/QhpJMykSi8 (click the link then launch the pdf)

The short story is this: $DWDP investors are now entitled to one share of $DOW each every 3 shares of DWDP held.

This means that the true value of our options is price of DWDP stock + one third price of DOW stock (approximately).

In Texas, it's often said: "Go Big or Go Home."

We intend to do just that with a simple options play in a State of Texas namesake.

The All Star Charts team is not wildly bullish on US stocks here, though the consensus is that eventually we resume higher out of some sideways action that might take a few months to work through. That said, there is one sector we feel will lead us higher when the time is right and we've got a candidate stock that offers us a good opportunity to express our mildly bullish stance while keeping our risks manageable.

Due to a scheduling conflict around the annual CMT Symposium in New York, JC and I will be doing our monthly conference call a little later in the cycle this month. But have no worries, I'll provide some updates below on positions we have open with April options that may need some attention or adjustments.

I don't often take long premium plays ahead of an earnings event, but there's one coming on the horizon where the options pricing isn't too high (yet) and the All Star Charts team has a price target that would yield us a greater than 4-to-1 return on risk if the earnings catalyst plays out in our favor.

A year ago, I made a commitment to healthier eating. Not that I was a slob or anything, it was just that my attitude about what I was willing to put into my body (basically anything) needed to change. At my age, you begin to think about these things.

That said, I'll still happily get long stocks of fast food companies that are poisoning the human race if there's a way for me to profit from it (then spend the earnings at the local vegan grocer!). And one household fast food chain is setting up for a big potential move.

You probably thought this would be a piece about US stocks, didn't you?

While it certainly looks like the Christmas lows in the US are going to stick around for a while, the All Star Charts team is also detecting some broader potential breakouts overseas that we can participate in with options on index ETFs.

When the facts change, I change my mind. What do you do, Sir? ~ John Maynard Keynes

This quote has been on my mind as I am about to publish a trade idea that runs contrary to an existing position we're currently carrying. And if the Market Gods are smiling, we may be able to win on both of them!

The cool thing about working with smart people is being able to learn from them. Having Sean McLaughlin on our team has made everyone better, not just our clients but us as well. In today's video, we tackle the question of when it makes more sense to finance an options position by selling a different contract to collect the income vs simply just buying calls or puts. As usual, Sean does a nice job of explaining this in a way that anyone could understand.

You've probably noticed a few recent blog posts and twitter comments from the All Star Charts team singing the praises of "cash". There's nothing wrong with cash as a position if there aren't any compelling ideas to get you excited about. In fact, its often the best move.

However, we options players can still structure trades that will profit in sideways markets. But a big challenge currently is that we prefer higher options prices driven by relatively high volatility to sell into -- and its hard to find that anywhere right now. Across the board, options prices are getting extremely compressed everywhere. What to do?

How about a strategy that positions us to benefit from sideways action while also getting a goose from any reversion to the mean (er, higher) volatility?

One options strategy that we occasionally employ at All Star Options is a bullish Risk Reversal. This is a trade we like to put on when the cost of naked calls is too high for our comfort (due to high volatility and/or higher priced strikes), and we're comfortable taking ownership of long stock in a "worst case" scenario.

Simply, it is a trade where we typically purchase an out-of-the-money call, and finance this purchase (all or in part) with the sale of an equal amount of naked puts in the the same expiration cycle.

This is an advanced-level trade that requires more buying power than most trades we put on (due to the naked puts component) and a higher level of comfort with risk. A typical risk reward graph would look like this:

Imitation is the best form of flattery. And we liked our trade idea in $WYNN so much that a nearly identical play setting up in a completely different sector warrants us the opportunity to repeat the same mechanics.