Advanced, +150% in 2 Days on AMD Puts!

AMD chart

Chart by Steven Sarnoff, h/t stockcharts.com

Well, it’s been a minute.  It feels good to be back to the blog.  At the onset of the global pandemic, my wife, Tracy, was no longer able to teach her in-person whole-food plant-based cooking classes (for disease prevention and survival).  Together we decided to launch a business selling her nutritious and delicious foods.  I switched Options Hotline to a monthly publication to give me more time to help get the food business going.

We are so grateful for the tremendous response to Tracy’s Real Foods.  Check us out at tracysrealfoods.com.  We’re growing locally around San Diego and ship nationwide.  Let me know what you think.

Now, back to options.  The greatest options gains are made when your options quickly move from “out-of-the-money” to “in-the-money.”  That is just what happened with our September 1st recommendation on AMD (Advanced Micro Devices). 

The late-August push higher created glaring negative technical divergences between price and my indicators (new highs for price, but not the indicators shows price may not be as strong as it appears).  Leading technology stocks looked ready to correct.  My recommended AMD October $90 put for $7.00 or less was triggered on the September 2nd opening at $6.70. 

As you can see on my daily candlestick chart above, AMD posted consecutive negative black lines and broke the positive influence of the short-term moving average.  Friday saw a rebound right to that line posting an indecisive candle.  Former support often represents new resistance.  We shall see.

Friday’s intraday decline helped our recommended put option achieve our stated $15.00 price objective.  The AMD October $90 put traded as high as $16.75, +150% in 2 days, with an always known and strictly limited risk!  That is what I call Superleverage.

Started by my father in October of 1989, Options Hotline is approaching its 32nd year of publication.  I can’t guarantee all my recos will be like AMD, but I do promise to continue to do my best to find options winners for my great subscribers.

Subscribe today to see what we come up with for October.

Stay safe.

Best regards,

Steve

 

Your Almost Daily Bit of Wall Street Wit & Wisdom

Federal Reserve

Marriner S. Eccles Building, h/t federalreserve.gov

“The scope and speed of this downturn are without modern precedent, significantly worse than any recession since World War II. We are seeing a severe decline in economic activity and in employment, and already the job gains of the past decade have been erased. Since the pandemic arrived in force just two months ago, more than 20 million people have lost their jobs. A Fed survey being released tomorrow reflects findings similar to many others: Among people who were working in February, almost 40 percent of those in households making less than $40,000 a year had lost a job in March. This reversal of economic fortune has caused a level of pain that is hard to capture in words, as lives are upended amid great uncertainty about the future.”
— Fed Chair Jerome H. Powell, Speech on Current Economic Issues

May Day or Mayday?

S&P 500 chart

Chart by Steven Sarnoff, h/t stockcharts.com

Stocks rebounded throughout the month of April.  The month ended with the market reaching a natural technical retracement level.  May Day not only started the new month, but May may see selling pick up to drive price lower over the weeks ahead.

Former support (demand) often represents new resistance (supply).  You can see on my weekly chart of the S&P 500 ETF (SPY), that price backed down after encountering the negative influence of a line of average price movement.

The character of the behavior of market price movement shows sellers regaining the edge.

Don’t be surprised to see the March lows taken out.

Subscribe to Options Hotline, now in our 31st year of publication, today to vie for fun and profit.

Stay safe.

Best regards,

Steve

 

Resistance

bear catching salmon

Thomas Mangelsen’s iconic photo h/t mangelsen.com

SUBSCRIBER NOTE: Options Hotline monthly broadcast goes out after the close today

Former support (demand) often represents new resistance (supply).  April’s rebound brought the stock market right to technical resistance. 

A turn lower here indicates a change in the short-term balance of power.

Sign up for Options Hotline today to see how our subscribers vie for fun and profit over the weeks ahead.

Best regards,

Steve