Each week, we bring trades our subscribers that have the potential of creating daily, weekly and/or monthly income. Some trades are both; scalps and income trades, that can deposit funds into your account on a regular basis.
What follows are two such trades:
ACOR was a “Trade of the Day” setup. Whenever we use this term, it means you should watch for the criteria and trade accordingly.
The stock opens with buying pressure. This usually produces either a white Marubozu candle, a large body white candle or a series of smaller bullish candles, during the Opening Range (9:30AM – 10AM EST). Then the stock begins to break higher from a flag or small consolidation. The key is the breakout above the flag, which signals continuation of the trend and buying pressure. Both of these conditions, confirm a bullish trade will most likely continue. Stop when price action falls below the 9/20ema on close.
We see this “Trade of the Day” condition in ACOR. As the trade starts, it breaks out of the Opening Range, flags and moves higher. The evening session is more profitable, once price breaks out of its consolidation between 11:15AM and 1PM EST. Incremental 100 share or greater position size, nets $100 (+/-) for each 100 shares owned, in a short period of time. 1000 shares or a $25,500 investment, would have provided a significant daily income stream ($2000 – commissions), when trading a stock such as ACOR yesterday alone. The risk on the position was only $200 at entry. Your stop was/is below the flag (-0.20).
Look for these types of setups. Post them in the room during the Opening Range and we will look at them for potential trades during the session.
ACOR broke higher on Monday. Our existing position is ITM now, so we will capture the entire potential profit projected when we took the position on Friday. If the stock remains above the 26 strike we collect $3,700. Not bad for an income trade. The options expire in 16 days.
Now that ACOR pushed higher you might consider a trade similar to what we took on Friday.
You could generate $2,250 premium up front by trading covered calls. You could sell 10 contracts of ACOR 2017 17-MAR 30.00 CALL. If the stock were to rise above the 30.00 strike before expiration, you could make a profit of $4,850. (This represents the appreciation in the stock price plus the premium received.)
This trade will also get you 8.2% worth of downside protection for your stock. Premium received: $2,250. Potential Profit if Stock is Above Strike: $4,850 Downside Protection: 8.2%
We see the “Trade of the Day” condition in AMD.
As the trade started, it produces a white Marabou candle at Point “A”, then breaks out of the Opening Range, flags and moves higher. Point “B” is the safest entry, as the follow through white candle, confirms bullish momentum is present. 1000 shares traded on AMD from flag breakout to stop (Point “C”) would net the trader $500.00 for their trouble. They could now take the rest of the day off and look for another “Trade of the Day” in the following session.
Now that AMD has pushed higher, on significant volume, it shows us bulls are in control. Therefore we would look to take another “Trade of the Day” position if we see similar results.
We could also take an income on this stock and go play a round of golf after 10:30AM EST. Insert sarcasm.
You could generate $640 by trading covered calls. You could buy 1000 shares of AMD and immediately sell 10 contracts of AMD 2017 17-MAR 15.50 CALL.
If assigned in 16 days, you could make a profit of $940. This trade will also get you 4.2% worth of downside protection, should AMD pullback in the next 16 days. Premium received: $640.00 Potential Profit if Stock is Above Strike: $940 Downside Protection: 4.2%
If you consider potential candidates from the perspective outlined above, your are escentially following a strategy based approach. Given time and repetition, your mind will become more accustomed to this method of trading. Opinion based trading will only get you in trouble.
Have a great trade. We will be LIVE with the pre-market show at 9:00AM EST. I hope to see you there…….
Happy Mardi Gras!
Vinny
PS – I am from New Orleans! Viva la Mardi Gras!
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