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May 12th, 2024 | Issue 233 Happy Mother's Days to all the beautiful mothers. |
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Greetings, YellowTunnel Community! Last week, we dove into one of my favorite strategies in options trading, and today, I'm eager to share a story that highlights this strategy, especially during earnings season. The strategy I'm referring to is one I've always had a fondness for during times of volatility: the large call skew. This occurs in options trading when there's a distinct preference for buying call options over put options, often signaling optimism or anticipated upward movement in the underlying asset. This approach enables one to embrace volatility during earnings season through the purchase of option debit strategies such as condors and butterflies. It's a bit like finding hidden treasure in the market, particularly around earnings announcements. So, with Disney's earnings report on the horizon, I couldn't resist the opportunity to put this strategy to work. I decided to play it safe with Disney and took a position by betting that the stock would fall using something called a long put butterfly. It sounds complicated, I know, but it's all about setting things up just right to make a profit if the stock takes a dive. And dive it did! When Disney missed its earnings targets, the stock took a bit of a tumble, dipping down to $105 in the opening hours of trading. That's when my carefully planned trade really paid off, allowing me to close out with a nice profit of over 100%. So, what led me to make this move? Well, it all came down to spotting what we call a call skew. By looking at the numbers and seeing that there was a lot more interest in buying call options than puts, I knew I had a good opportunity on my hands. Take a look: |
In the image I've included above, you can see the data that helped me make my decision. It shows a lot of folks were interested in buying calls at the 105 and 130 strike prices, which tipped me off that something big might be coming. This trade just goes to show that even in uncertain times, there are ways to make smart moves in the market. And as we continue to explore these strategies together, I hope you'll join me in uncovering more opportunities to grow our portfolios. Until next time, happy trading, and remember, it's never too late to learn something new in the world of finance!" |
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WE ARE NOW ON THE X PLATFORM Every day, I highlight our best strategies and potential trading setups via the X platform. Check it out! Click Here>> |
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Chief Investment Officer/Founder |
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TRADE IDEA OF THE WEEK Unlocking Potential with Alphabet Inc. ($GOOGL) |
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As we look ahead to the upcoming week, one trade opportunity that warrants careful consideration is Alphabet Inc. ($GOOGL), a leading player in the tech space. Alphabet, the parent company of Google, boasts a formidable presence in the technology ecosystem, with a diverse portfolio of products and services that span search, advertising, cloud computing, and artificial intelligence. |
Despite recent market fluctuations, Alphabet has maintained its position as a market leader, with its core businesses delivering strong performance, particularly in advertising revenue driven by its dominant position in online search. Moreover, Alphabet's strategic investments in emerging technologies, such as cloud computing and autonomous vehicles, position it for long-term growth and innovation. Considering the latest market conditions and insights gleaned from the above article, buying Alphabet Inc. represents a compelling opportunity for investors. With its solid fundamentals, innovative capabilities, and strategic vision, Alphabet is well-equipped to weather market turbulence and capitalize on emerging trends, making it an attractive prospect for those seeking stability amid volatility. |
Given the prevailing market conditions outlined in the article, investing in Alphabet Inc. emerges as a strategic move for several reasons. Firstly, Alphabet boasts robust fundamentals, including strong revenue growth, healthy profit margins, and a solid balance sheet, providing a sturdy foundation for long-term growth potential. Secondly, Alphabet's innovative capabilities and diversified business portfolio position it favorably to adapt to changing market dynamics and capitalize on emerging trends, enhancing its competitive advantage and market leadership. Moreover, Alphabet's strategic vision and prudent management further bolster its investment appeal, as demonstrated by its proactive approach to driving growth through strategic acquisitions, partnerships, and investments. Furthermore, Alphabet's presence in key growth sectors, such as digital advertising, cloud services, and hardware, provides diversified revenue streams, enhancing its resilience to economic downturns and market fluctuations. Just take a look at GOOGL's 10-day Predicted Data: |
Overall, by incorporating Alphabet Inc. into their investment portfolios, investors stand to benefit from exposure to a company with strong fundamentals, innovative prowess, strategic vision, and diversified revenue streams, making it a compelling opportunity to capitalize on the long-term growth prospects of the dynamic tech sector. This week, I'll be adding Alphabet Inc. ($GOOGL) to my portfolio! |
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| Vlad Karpel
YellowTunnel and Tradespoon Founder |
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P.S. Click here for access to the Power Trading Live Strategy Roundtable Recorded every Thursday. |
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DISCLAIMER: Vlad and his team may have a financial interest in the picks as they trade many of the same equities and options they pick. Vlad Karpel and YellowTunnel (Company) is not an investment advisory service, nor a registered investment advisor or broker-dealer and does not purport to tell or suggest which securities or currencies customers should buy or sell for themselves. All investing strategies are made available to the general public on a regular basis. We do not provide personalized financial advice or investment recommendations. As an investor, you know that any kind of investment opportunity has its risks. There is no such thing as low-risk stocks and we recommend you invest wisely and that only risk capital should be used to trade. Investing in Stocks and Options is highly speculative. No representation is being made that the use of this strategy or any system or trading methodology will generate profits. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed here and on our website. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE SUCCESS: It should not be assumed that the methods, techniques, or indicators developed at YellowTunnel will be profitable or that they will not result in losses. Nor should it be assumed that future picks will be profitable or will equal past performance. All of the content on our website and in our email alerts is for informational purposes only and should not be construed as an offer, or solicitation of an offer, to buy or sell securities. Remember, you should always consult with a licensed securities professional before purchasing or selling securities of companies profiled or discussed on YellowTunnel.com. Performance results that are discussed above are from the Live Trading Room. Multiple YellowTunnel tools were used to achieve these results. Trade % Gain/Loss is calculated by dividing the $ Gain/Loss by the Max Risk, which is the posted Stop Loss for the trade. Yellow Tunnel's performance data represents the average return on all trading recommendations from January 1, 2020, to today. *Win rate percentage reflects the average that Yellow Tunnel's software helped me identify a profitable investment strategy.** Triple-digit returns are not typical and are not intended to reflect the likelihood of similar returns in the future. |
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