Stocks are facing their first sign of adversity in what seems like months. And to be honest, it’s not overly surprising…
We’re running out of catalysts…
- Earnings have been good enough
- The Fed “remains patient”
- No updates on trade talks
- Stocks have risen for 4 straight months without a pause
That said, I’m not calling for a market sell-off. I mean how can you with how hot some of these recent IPOs have been. Today’s IPO, Beyond Meat, is up over 100%, a sign that investors are still hungry to buy stocks.
However, I’m not in the bull or bear camp…
I’m in the “make money” camp. That said, I’ve been playing both sides of the market, as well as, being stock specific.
Luckily for me, as an options trader, I’ve figured out ways to make large sums of money even when stocks are barely moving…
That said, you better believe I’m banking on days (like today) when we get some actual volatility in the market.
(Weekly Money Multiplier clients get my alerts in real-time, if you think you can benefit from trades like this, click here to join my service)
One thing I like about options is I know what I’m risking. For example, when I buy a put option, I know my risk is limited to the price of those contracts. That said, bearish bets have been paying off handsomely.
(Here’s another one of my +100% winners of the day. Not getting my alerts? Here’s how you can)
And that’s the thing… my money pattern works in all types of market settings. However, it’s been awhile since we discussed how it works during sell-offs. Read on to learn how I spot opportunities like FIVE and IWM…so you can too next time.
With the market near all-time highs, traders are starting to wonder if the entire run this year so far has been justified.
That in mind, it seems as if the markets are starting to focus their attention back to technicals… and that’s fine by me because that’s been my main focus. Now, more specifically, I’m watching key levels, and looking for two lines to cross. It’s really that simple.
What am I talking about here?
Well, it’s what I call the money pattern.
For example, yesterday, I traded the iShares Russell 2000 Index ETF (IWM). Now, IWM tracks the small cap stocks market, and it was flirting around a key resistance level. Basically, this was an area where the stock has had a hard time staying above.
Here’s a look at the hourly chart yesterday.
If you notice in the chart above, the blue line crossed below the red line. What that tells us is that IWM could pull back and start to trade lower. Now, I was anticipating that to happen, which is why I purchased put options yesterday. Additionally, I was monitoring the market after the FOMC announcement… once the market turned south after the initial rally… I figured it was a good time to buy puts in IWM at those levels.
Now, with just a small move in IWM, I was able to lock in nearly $30K overnight!
(If you need more case studies, make sure to watch my video on how to profit off crashing stocks)
Another Money Pattern Example
Now, this actually wasn’t the only 100%+ winner I had using this pattern.
I also used the same pattern to trade Five Below Inc (FIVE).
Here’s a look at what I sent out to Weekly Money Multiplier clients once I saw the money pattern.
(Not getting these alerts? Click here to start.)
Here’s what I was watching in FIVE on the hourly chart.
The stock had some resistance around $148. If you look in the blue encircled area, the blue line looked like it was about to cross below the red line (bearish crossover). This gave us an easy trading plan… Buy put options on FIVE, if the stock closes above the resistance level – I was using $150 as a stop – sell those put options. Our target was between 4% and 5% below where it was trading at the time.
Now, a 4 – 5% move might not seem like a lot to you… but when you’re trading options a 5% move could translate to a 100%+ winner.
Well, here’s what the stock is doing just 2 days after my alert.
Let’s look at one last money pattern example.
Check out Constellation Brands (STZ) on the hourly chart.
Again, we’re anticipating the blue line to cross below the red line. So what did I do? I went out and bought put options. If the stock broke above $215, I would stop out of my position.
Now, here’s a look at what the stock is currently doing after I alerted Weekly Money Multiplier clients about the bearish trade in STZ.
Keep in mind, I’m still long puts in STZ, but if this stock continues to pull back… this could be another 100%+ winner.
As you can see, when you anticipate a bearish crossover (blue line crossing below the red line)… it becomes a lot easier to trade options and consistently hit home runs.
If you want to learn more about the money pattern, or just need a refresher, make sure to watch this video – it covers several examples of this strategy.