Happy Monday, Power Profit Traders!
If you missed me on Money Morning LIVE at 8:30 a.m. ET, I talked about what I like to call the 1-Inch Putt trade.
You don’t have to be Jack Nicklaus to know that putting a golf ball one inch from the cup is a prettttty high-probability shot, and long-time Power Profit Traders know that I’m all about stacking the odds in my favor.
In Tom Gentile-speak, a 1-Inch Putt is a trade that has TWO of my signals flashing.
This morning, for instance, I discussed how Facebook (FB) not only popped up on my Darknet Channels radar, but also has seasonality in its favor right now, per my Money Calendar historical data.
The shares recently held triple-stack support around $340, and looking at the past nine years’ worth of data (that’s how long FB has been public), my Money Calendar indicated that buying today and holding 24 days resulted in an 87% historical win ratio!
Courtesy of Tom Gentile’s Money Calendar
But the best way to trade this 1-Inch Putt on Facebook is via option spreads — and at
11 a.m. ET today, I’m going to outline
two potential FB spreads and give you a crash course on
Option Greeks and why they matter.
Make sure you’re in the room and asking questions via chat!
After all, I recently recommitted to upping my teaching game, and the best way to learn is to watch me in action — which is why I plan to host a lot more LIVE sessions very soon… Stay tuned for more on that.
In the meantime, I’ll take a look at today’s Power Profit Trades Watchlist — and the bank stock some traders expect to hit new highs after earnings, as well as the overhead level Apple (AAPL) option players are watching.
BAC, AAPL Stare Up at Heavy Open Interest
Today’s Power Profit Trades Watchlist is brought to you by the Morning Report Highest Option Open Interest list in the TG Suite app. (For instructions on how to find and download the app, click here.)
So, what is this telling us?
Well, open interest measures how many contracts of a particular option are open at the moment.
That means the contracts were either bought to open or sold to open at some point in time, and haven’t yet been closed or exercised.
Because LEAPS — or Long-term Equity AnticiPation Securities — are issued years in advance, it’s not surprising to see many of the options on today’s Power Profit Trades Watchlist don’t expire until January 2022 or 2023.
Among the names in that category is Bank of America (BAC) — its $45-strike call option expiring Jan. 21, 2022 is on the Highest Open Interest list.
Buyers of these calls are surely hoping Bank of America kills its next earnings release, which is slated for mid-October.
A solid earnings showing could finally push BAC shares north of the elusive $45 level (the call strike), as the $43-$44 region has acted as a roadblock so far in 2021.
Outside of LEAPS, the most heavily populated option on our Watchlist belongs to none other than
Apple (AAPL).
Specifically, AAPL’s October $150-strike call (a standard monthly option, which expires the third Friday of the month — Oct. 15, in this case) is host to a whopping 152,000 contracts and change.
AAPL shares plummeted amid the broad-market bloodbath last week, gapping lower to definitively break its 50-day moving average for the first time since June.
In order for those AAPL calls to move
into the money (ITM), the stock would need to extend the late-week rebound it started last week and hope the 50-day doesn’t turn into a speed bump.
By paying attention to notable open interest in the Morning Report, we can see where traders are placing their bets on stocks and ETFs — and which price points could have psychological significance among the collective options crowd.
That’s all for today, but hop in this room right now to watch me LIVE at 11 a.m. ET, where I’ll be outlining the aforementioned FB spreads, and dropping some serious MUST-KNOW info on Option Greeks.
While I know Greeks can be intimidating at first, understanding delta, theta, and the other Greeks allows you to better assess your risk/reward before entering a trade, and can often be a make-or-break factor in strike selection…
So what are you waiting for? Hop in the room and I’ll see you at 11 a.m. ET. sharp!
Tom Gentile
America’s #1 Pattern Trader, Power Profit Trades
