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Philstockworld Top Trade Review

Image result for top trade ideasTop Trades has become one of Philstockworld's most popular Memberships and that's a shame because I actually hate trading services that just give out trade ideas.  Unfortunately, that's what the market demands and, though Top Trade Members miss out on the trading education and deep discussions we have in our Live Member Chat Room, they usually do get a lot of great trades.

We began Top trades in August of 2015 and year one saw 96 out of 119 Trade Ideas (80.6%) made money immediately (by the first review) and half of the intial losers turned around over time as well.  As of our prior review, covering Sept-Dec, we had 22 of 30 trade ideas (73%) in the green already but, for example, one of our "losers" was RH – a trade that was in our Long-Term Portfolio:

As of the last review, we only had the short puts, which were down $1,400 (23%) so a "loser:" and, at the time (2/20), I said:

As you can see, they hit our target floor at $25 but we were in Vegas and forgot to add the bull call spread at the time – though I still like the plan.  The puts, by themselves, are now $7.40 ($7,400) so down $1,400 (23%) and I still like that sale along with 10 2019 $25 calls $9.75 ($9,750), selling 10 of the $35 calls for $6.20 ($6,200) for $3,550 so we still have a net $2,450 credit (or a $3,850 credit if starting from scratch) and our worst case is owning RH at net $22.55 – 16% below the current price.  That's an official add for our LTP!  

Obviously, the situation has much improved, despite the recent pullback.  The short 2019 $25 puts are down to $4.10 ($4,100) and the 2019 $25/35 bull call spread is in the money at $7 ($7,000) for net $2,900, up $5,350 (218%) from our original net $2,450 credit and well on the way to making the full $10,000 (still a good trade if you can settle for a double).  

The secret to our success in Top Trades is PATIENCE!!! Patience is the hardest thing we try to teach our Members at Philstockworld as it tends to take years of practice and the nice thing about the Top Trades Membership is that you don't have a choice – we make our picks ONLY when we see a nice opportunity and if that's once a week, twice a week or just once a month – we don't care – we only make picks that have excellent chances of making a profit – 80% chances going by our first year's performance…

Image result for "be the house"Top Trade Alerts come from our Live Member Chat Room at Philstockworld and represent a very small portion of our trade ideas but they are a fair representation of applying our "Be the House – NOT the Gambler" strategy and you can learn a lot by reviewing the performance of these trades through up and down markets over the course of a year.  All PSW Basic and Premium Members have Top Trade Access (just make sure your smart phone number is in the box here if you want text alerts in addition to our EMail alerts). 

Combining a solid winning percentage with sensible portfolio management techniques (diversification, managing losses, hedging) will have you beating the S&P by a mile with no sweat.  Generally, with our Top Trades, we're simply picking stocks we feel are underpriced and we're using our various options techniques to give ourselves even better discounts and hedged entries but these are patience plays that can take time to get going, usually our Top Trade Ideas have long-term objectives.  

Thursday, Jan 5th was our first Top Trade of the year and we had two solar plays starting with JASO:

I have been looking over solar plays and JASO seems to be the least-scary Chinese maker.  If the financials are to be believed, they made $900M in 2015 but seem to be more like $700M this year but that's OK as the stock at $5 gives them a market cap of $239M.   Of course it's hard to tell with an ADR what you are really getting but I like them enough to take a poke in the STP:

  • Sell 20 JASO June $5 puts for 0.70 ($1,400) 
  • Buy 50 JASO June $4 calls for $1.30 ($6,500)
  • Sell 50 JASO June $6 calls for 0.40 ($2,000)

That's net $3,100 on the $10,000 spread and we'll see how it goes but I think $5 is a good floor to play off.  

As you can see from the charts, JASO rocketed into our target zone and is on track to finish June over $6, paying the full $10,000 for a proit of $6,900 (222%) in 6 months – not a bad first trade of the year.  

CSIQ has had a rockier time but still on track as we gave them 6 extra months to hit our target (they already did and pulled back):

CSIQ has nice long options so let's make them a play for the OOP:

  • Sell 20 CSIQ 2019 $10 puts for $3 ($6,000) 
  • Buy 20 CSIQ 2018 $10 calls for $4.30 ($8,600) 
  • Sell 20 CSIQ July $15 calls for $1.35 ($2,700) 

That's going to be a net $100 credit on the $10,000 spread that's $5,500 in the money to start – gotta love that.  Our worst case is owning 2,000 shares for $10 ($20,000) and, since CSIQ is Canada-based, I'm not as worried about them going down the tubes as I would be about a pure China play.

If all goes well, we make $10,100, which is an 1,100% return on our cash and the margin on the short puts is just $2,128 – so it's a super-efficient trade as well.

The 2019 $10 puts have dropped to $2 ($2,000) and the $10/15 bull call spread is now $2.50 ($2,500) so net $500 is up $600 (600%) so far but the spread is $2,800 in the money so still great for a new trade with "only" $9,400 upside potential.  

Wed, Jan 11th we had a hedging play using TZA and Taser (AAXN):

  • Buy 20 TZA March $18 calls for $2.25 ($4,500) 
  • Sell 20 TZA March $22 calls for $1 ($2,000) 
  • Sell 5 TASR 2019 $20 puts for $3.20 ($1,600)

The net of the spread is $900 on the $8,000 spread that's $2,500 in the money at $19.25 so TZA has to fall 6.4% for you to lose money on the March spread.  We offset the cost by promising to buy 500 shares of Taser (TASR) (our Stock of the Decade) for $20, which is $4.63 (19%) off the current price but you can substitute any stock you REALLY want to own if it gets cheaper.  

Though TZA hit $20 on Jan 19th, it finished out of the money in March so, for the purpose of this review, we'll call that a loss of $2,500 and, currently, the short puts are $2 ($1,000) so up $600 nets a $1,900 loss (211%) so far.  As noted in the post (follow link) – that's the cost of the insurance and, hopefully, the short puts expire worthless and our loss drops to $900, our intended 10%(ish) cost of insurance.  

Mon, Jan 23rd we picked up a position on HBI and added it to our Long-Term Portfolio:

  • Sell 10 HBI 2019 $20 puts for $3 ($3,000)
  • Buy 10 2019 $18 calls for $6.20 ($6,200) 
  • Sell 10 2019 $23 calls for $3.80 ($3,800)

HBI Hanesbrands Inc. daily Stock Chart

That's a net $600 credit on the $5,000 spread that's $90% in the money to start!  Obligation is, of course, to own 1,000 shares at net $19.40 but I'm very comfortable with that.

Sadly, our timing was not good here and the stock fell off on earnings but has since recovered a bit.  Since we were BEING THE HOUSE and selling premium, time works to our advantage and the short puts have dropped to $2.60 ($2,600) and the $18/23 spread is $2.55 ($2,500) so it's net -$100 which is still up $500 (83%) from where we started – this is why we SELL premium and try to avoid buying it!   Still good for a new trade too.  

Wed, Jan 25th we went for the gold with ABX:

  • Sell 5 ABX 2019 $15 puts for $2.60 ($1,300) 
  • Buy 10 ABX 2019 $15 calls for $5.70 ($5,700)
  • Sell 10 ABX 2019 $22 calls for $3 ($3,000) 

That's net $1,400 on the $7,000 potential spread for an upside of $5,600 (400%) if ABX hits $22 into Jan, 2019.  Worst-case is you own 500 shares at net $16.40 ($8,200) but that's not a loss, that's just the entry cost.  ToS says net $1,500 margin, so it's an efficient trade as well. 

Fun up and down action so far and, once again BEING THE HOUSE saves us as the short puts have fallen to $2 ($1,000) while the $15/22 spread is down a bit at $2.55 ($2,550) but that's net $1,550 so up $150 (10%) and still good for a new trade.  

Monday, Jan 30th we found 3 trades we liked, the first was our Stock of the Year, Silver Wheaton (SLW), who changed their symbol to WPM since but, fortuntely, it hasn't hindered the performance:

  • Buy 20 WPM 2019 $17 calls at $7.50 ($15,000)
  • Sell 20 WPM 2019 $22 calls for $5 ($10,000)
  • Sell 10 WPM 2019 $17 puts for $2.55 ($2,550)
  • Sell 5 WPM June $24 calls for $1.15 ($575)

The net on the $10,000 spread is $1,875 for $8,125 (433%) upside potential but that will hopefully be improved by selling 1/4 out of the money shares each quarter (6 quarters to sell while we wait).  

Though we had a much better entry in December, when we first identified SLW, this spread is right on track as well and the short calls will expire worthless and we'll look to sell 5 Sept whatevers for $1+ ($22s at the moment).  Meanwhile the 2019 $17 puts are $2 ($2,000) and the $17/22 bull call spread is $2.30 ($4,600) for net $2,600, which is up $725 (38%) so far and still good for a new trade.  

Our 2nd trade of the day was ATVI with some simple logic:

So what was that on the news before I got distracted?  Oh yeah, ATVI has this new killer game called Overwatch and those things are subscription models so they should see a serious uptick in the next 12 months.  In the LTP, let's sell 5 of the 2019 $35 puts for $4.75 ($2,375) just to keep an eye on them for now.  

Too bad we weren't more aggressive as it really took off on us but already the short puts are down to $1.15 ($575) for a gain of $1,800 (313%) – not bad for a placeholder.

Our 3rd trade was and still is a bit of a gamble on the wireless charging fad with WATT:

This is another one I would like to keep our eye on in the LTP and, since they are only a $14.59 stock and we can sell the WATT 2019 $12.50 puts for $5.50, let's sell 10 of those ($5,500) and see what happens.

2017 To Be Pivotal Year For Energous; Oppenheimer Downgrades Stock

The key here was timing as we jumped in on the Oppenheimer dip and got a good price for the short puts, which have now dropped back to $4.20 ($4,200) for a gain of $1,300 (23%) so far.  

Wed, Feb 8th we took a pre-earnings chance on Twitter (TWTR):

TWTR/Lunar – Well I'm bullish but earnings is a huge risk.  Our Jan $13 calls are still just $6.70 and you can sell the $18 calls for $3.70 for net $3 on the $5 spread and if TWTR takes off, you collect a 60% profit in a year and, if they sell off, THEN you can sell puts to cover the $3 (2019 $13 puts are $1.75 so maybe $3.50 on a good drop).  

That did not work out at first but, fortunately, we have since recovered and because we were BEING THE HOUSE and sold premium, we have time on our side and the short 2019 $13 puts are back to 0.40 ($400) and the Jan $13/18 bull call spread is $3.20 ($3,200) for net $2,800 which is all profit off the net $0 entry.  

Monday, Feb 13th we had another triple-dip – all additions to our Long-Term Portfolio:

  • Sell 5 XOM 2019 $80 puts for $8.50 ($4,250)
  • Buy 10 XOM 2019 $70 calls  for $15.20 ($15,200)
  • Sell 10 XOM 2019 $85 calls for $6.25 ($6,250)

Net on this $15,000 spread is $4,700 so potential upside is $11,300 (240%) and ToS says $3,500 in margin so it's pretty efficient.  

BEING THE HOUSE saves us again as Exxon has had a rough time of it but our spread was very conservative, so still in good shape.  The $80 puts are still $8.50 ($4,250) while the spread is at $5.95 ($5,950) for net $1,700, up $3,200 (213%) despite XOM being lower than where we started.

Trade #2 was an old favorite, QCOM, who took a dip we wanted to take advantage of: 

Sell 10 QCOM 2019 $50 puts for $7.10 ($7,100)

Buy 10 QCOM 2019 $45 calls for $12.80 ($12,800)

Sell 10 QCOM 2019 $55 calls for $7.20 ($7,200)

Net on this trade is a $1,500 credit so worst case is owning 1,000 QCOM for net $48.50 ($48,500), which is fine as they pay a $2.12 dividend.  Meanwhile, the upside is net $11,500 (1,000%), which is way better than 2 years worth of dividends so it's a nice way to start.  Net margin just $4,000 – also very efficient.

You have to love it when your 2-year trade is well in the money in the first 6 months.  The $50 puts have droped to $4.30 ($4,300) and the $45/55 bull call spread is now $6.50 ($6,500) for net $2,200, which is up $3,700 (246%) already.  

Trade #3 is another old favorite, Supervalu:

  • SVU Sell 50 2019 $3.50 puts at 0.70 ($3,500)
  • SVU Buy 50 2019 $2 calls at $2.20 ($11,000)
  • SVU Sell 50 2019 $3.50 calls at $1.35 ($6,750)

That's net $750 on the net $7,500 so upside is $6,750 (900%) at the current price and the margin on ToS is only $2K so nice, efficient trade.  

The stock is right back where we started after a fun dip in March and the $3.50 puts are 0.61 ($3,050) while the $2/3.50 spread is still hanging around 0.97 ($4,850), despite being 100% in the money.  Have to be patient with these spreads.  That makes the net $1,800 which is up $1,050 (140%) and I certainly still like it as a new trade with a $6,950 upside from here.  

Friday, Feb 17th we shared the PSW Watch List with our Top Trade Subscribers and the only action item was ESRX:

As noted above, I'm inclined to add ESRX and sell 5 2019 $65 puts for $8 in the LTP and we'll consider some more next week.

So far not good on them with the $65 puts climbing to $8.80 ($4,400) for a $400 (10%) loss.  

Thursday Feb 23rd we though Game Stop was gaining traction but not so far:

  • Buy 1,000 GME at $25.77 ($25,770)
  • Sell 10 GME 2019 $23 calls for $5.60 ($5,600) 
  • Sell 10 GME 2019 $20 puts for $3.05 ($3,050) 

That's net $17,120 and, if assigned 1,000 more at $20, our average would be $18.56 for 2,000 ($37,120) – so that's our max loss and max commitment.  Meanwhile, we collect $1,480 against our $17,120 cash outlay in dividends (8.6%) and, if we get called away at $23 ($23,000) in two years, that's ($23,000 + $1,480 + $1,480) = $25,960 – $17,120 = $8,840 profit (51.6%) so 20.8% per year profit. 

The good news is they did pay a $380 dividend on March 10th with another one coming soon but the stock dropped to $22.67 ($22,670) and the $23 calls are still $3.30 ($3,300) while the $20 puts are $3.87 ($3,870) so net $15,880 is down $1,240 (7.2%).  Still good for a new trade though. 

Overall, not a terrible start to 2017 with our first two months of Top Trade Alerts generating 14 trade ideas and 11 winners (so far) for a 78% winning percentage and a net profit of $19,185.  That brings us to 33 out of 44 (75%) for year two.  Of course, some of our losers are hedges, which are supposed to lose if our longs are winning – keep that in mind!  

Remember:  At PSW our PHILosophy is to Teach a Man to Fish – not just give out fish and, if you'd like to learn to identify your own Top Trades and we've been making you good money on these fish – why not try upgrading your Membership to our Live Member Chat Room and learn how to fish like we do – every day.

 


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  1. Phil 

    On the monthly chart it appears Dow is about to hit minor resistant which caused the market to drop in 2009  would like to know your thoughts about it. 

    Thanks as always 

    Pat



  2. Fish is ok, but where's the beef? :) Jk, thanks for all you do Phil


  3. Phil/ Top traes alerts:

     

    The service is valid only for U.S carriers, is it difficult to open it to other non U.S ones? or other alternative instead.


  4. BTW,  what you think about ARCX? is a oil terminals and related services LP


  5. they want GNC shares;

     

    This is an offer for you to loan shares from account ******** to Charles Schwab & Co., Inc. In return you will receive interest payments during the time the shares are loaned. Due to market conditions, the interest rates and demand to borrow may change during this time. You or Charles Schwab & Co. Inc., may withdraw at any time.


  6. What should I say? 

    No--lets see a squeeze? 

    Or yes-- can't hurt to make a little interest while I wait?


  7. Jabo;  If they are paying you X % is because they think can get a greater amount using YOUR stock, why don´t you sell puts against your position instead?