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Monday, February 26, 2024

$1,500 Friday – Yesterday’s Futures Play Pays Big!

That's $2,200 in two days playing with us!

Not bad for free picks, right?  On Wednesday, we played the Nasdaq Futures (/NQ) short at 4,100 and those gave us a nice, $700 per contract gain in just a few hours.  Yesterday, we reviewed that trade idea right in the morning post (which you can have delivered to you every morning, pre-market, by SUBSCRIBING HERE) and I added:

That's why, today, right now, we are once again shorting the Futures at 17,100 in /YM(Dow) and 2,005 on /ES (S&P) and 1,175 on /TF(Russell).  Yesterday we shorted the Nasdaq(/NQ) at 4,100 – a trade idea I outlined in the morning post for our subscribers – and that trade made $700 per contract by noon.  Not a bad day's work, right?  

SPY 5 MINUTEFutures trading is a useful skill as we can make adjustments to our trading almost anytime we get some new information – even when the market is closed.  

We played bullish on Draghi fever early in the morning and then, in our Live Member Chat Room, at 10:35, we nailed the turn for a re-entry at 1,180 on the Russell (/TF Futures), 17,150 on the Dow (/YM) and 2,010 on the S&P (/ES) as well as $95 on oil (/CL) and we were rewarded with moves down to 1,160 (+$2,000 per contract), 17,025 (+$625 per contract), 1,990 (+$1,000 per contract) and $94.25 (+$750 per contract).  

As I said yesterday, we can make trades like this because the market is RIGGED and we understand how it's rigged, which enables us to play along and profit from the manipulation.  We don't like it, we don't endorse it but, since it happens every day – we may as well bet on it, right?  

Of course there are other ways to make money on pullback and we teach those as well at PSW. Here's a couple of trade ideas we had for our Members recently under the category of Porfolio Protection:

  • Member Chat, 8/25Of course the SQQQ is a bet against AAPL to some extent but, longer-term, there is some advantage to going short TQQQ (because of the decay) and I like the Jan $87.50/75 bear put spread at $4.75 in the $12.50 spread as TQQQ is up at $88.27 and decay alone will put you a buck or two in the money if the Nas flatlines at 4,550. 
  • Member Chat, 8/25I mentioned TQQQ above and for SQQQ I'd go for the Oct $35/39 bull call spread at $1.20 with SQQQ at $35.87 so you are mostly in the money with $2.80 upside (233%) if SQQQ goes up 9%, which would be a 3% drop in the Nas.  
  • Morning Post, 8/28In the STP, we're short the Dow with DXD ($24.40) and short the Nasdaq with SQQQ ($35.70) and short GMCR ($134.73) and WYNN ($196) and XRT ($89.47) and FAS ($106.71) and BIDU ($215) and TSLA ($263) with a few long hedges on stocks we really like to the long side.  In short (get it?), we're very short and positioned for a correction at this point.  
  • Member Chat, 8/29:  With RUT 1,170, I lean back to good old TZA.  Oct $14s are a super-reasonable $1.20 and you can sell $17s for .45 and that's .75 for the $3 spread that's .40 in the money, so great upside coverage to $3, which is up 300% on a $2.50 move in TZA which is less than 20% so a 6% RUT drop will make you 300%.  So, if you are going to lose $30,000 on a 6% drop, you can cover $15,000 with 50 of the spreads ($3,750) and leave it at that or sell an offset that you REALLY want to own if it gets cheaper, like our trades above.
  • Morning Alert, 9/2:  If, however, you buy just $2,500 worth of the of the TZA Oct $13/16 bull call spread at $1 (25 contracts), they will pay you back $7,500 if TZA goes up about 15% (just a 5% move up in the RUT) AND they don't lose all their money until TZA is down 10% (a 3% move up in the RUT) whereas a 3% move up in the RUT against your $15,000 worth of contracts would cost you $1,500 on $15,000 worth of TZA and a 5% move up in the RUT would cost you 15% or $2,200. 

It's too early to say that they are working but, as you can see from the notes, spreads like these can make excellent hedges to a bullish portfolio.  Acutally, that's not true – they are already working because, by having them, we don't have to panic out of our long position just because the market has a small dip.  In fact, we have a Buy List (Members Only) ready to trigger – using profits we might make on our short positions.   

We commit a relatively small amount of capital to some leveraged positions that give us big pay-offs on small drops in our indexes.  In our own Short-Term Portfolio, we are using DXD, GMCR, XLE, XRT, SQQQ, BIDU, FAS and TSLA as short postions to protect the profits we've made in our Long-Term Portfolio.  

Having BALANCE in our portfolios is what allows us to effectively make on-the-fly adjustments using our Futures trading.  $500 here and $1,000 there can really take the sting out of a market move that goes against you!  That's why we concentrate on teaching balanced portfolio strategies to our Members – they let us ride out these little corrections in style…

We're not expecting a big correction, maybe 5% or 10% at most – but we sure are ready for it, just in case.

Have a great weekend,

– Phil


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