Issue 144: Holy smokes! We just won BIG - Masters In Trading

Holy smokes! We just won BIG

What if you could take on a trade with just two possible outcomes – and one was a big winner? You could risk, for example, $1,000 on such a trade and potentially make $10,000 or more. In today’s Masters in Trading Digest, we'll show you how to do just that with options trading using a trade that was shared in $SPB. By buying options we can limit our risk while having the potential to make a large return if the trade goes our way. It's a great strategy to use when looking for high-return investment opportunities. So let's get started!

An idea to risk small to potentially win BIG was shared with Masters in Trading Community.

TRADE IDEA (10/10/22):  SPECTRUM BRANDS

Buy January 50/60 Bullish Call Spread for $1.20.

Four reasons we shared this idea:

  1. High-Value Target Buy Signal
  2. Volatility Visualizer – Monthly Close 100%
  3. Unusual Options Activity:  6,600 Calls vs. 243 Puts Trade
  4. Mid-November Earnings Catalyst
  • RISK:  $120
  • POTENTIAL REWARD:  $880

 High-Value Target Buy Signal

The High-Value Target (HVT) Tool provides BUY and SELL signals to simplify analysis for traders and is a critical utility that should be used for every single trade. It’s always prudent to see how far a stock trades from a stock has moved from its 21-day historical volatility moving average.  This was the first signal for $SPB.  Learn more about HVT Tool.

 Volatility Visualizer – Monthly Close 100%

Volatility Visualizer lets you see the expected range of a stock with a visual representation of the straddle along with supporting historical metrics.

The Volatility Visualizer charting tool, built specifically for thinkorswim, allows traders to plot the upper and lower Expected Move Bands using the implied volatility data that’s provided from the options market.  Notice how $SPB traded against its lower support band?  That was the 2nd signal to get a long position in $SPB.

Unusual Options Activity

The reason traders should always watch out for big unusual options activity is that it can be an indication that a large institutional investor is getting ready to make a move in the market. When you see this kind of trading, it's important to pay close attention and figure out what the institution might be up to. By doing so, you may be able to get ahead of the game and make some profitable trades before everyone else catches on.  That’s what traders were able to do in $SPB.

Masters in Trading Digest - Issue 144

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Congratulations to the Masters in Trading Community members getting long on $SPB.  Another great trade into the books!

Until then, trade smart.

Thanks for reading,
Jonathan Rose

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