Happy Friday, traders! How did your trading week go?
If you were in with me on the SHOP trade we did earlier this week, I know you’re feeling pretty good.
Because we placed a trade on Monday and by Wednesday we were out with at 27% gain!
But if you weren’t in SHOP with me, let me walk you through the trade.
Because it’s a great example of how the two main parts of this strategy work together to bring us incredibly consistent wins.
Overview
Our SHOP trade this week is based on my bread and butter: An income-style trade.
In this case, it was a spread.
Basically, a promise to buy the stock at a certain price if it drops below that price by a certain date.
But unlike a lot of my income trades, this one had a special twist.
See, I usually pick the stocks that I do my income trades with because I see a long, uptrending track record.
I usually like to see 6 months of a stock trending upward.
Because momentum in a stock is a powerful thing — and if you learn how to harness it properly, it practically guarantees a win.
Massive Money Flowing In
But like I said, this trade had a special twist.
See, I didn’t pick SHOP because it had a particularly long upward trending track record.
I picked it because I spotted large piles of cash being aggressively throw at SHOP.
Someone — likely someone in the know — was betting a whole of money that SHOP would end the week up.
But they weren’t outright buying the stock. It was an aggressive, short term options play.
And it made for a perfect quick, in-and-out opportunity for us.
A Win, Even If We Weren’t 100% Right
If you pull up a chart of SHOP, you’ll see that while the stock IS up from Monday’s open…
It’s up just a measly 1.4%!
But still, we won our trade — to the tune of nearly 30%, just 2 days after we entered it.
And THAT right there is why I love income trades.
Because I don’t need to be 100% right.
I just need to avoid being 100% wrong.
And that is a whole lot easier.
Beause I don’t need all the things that traditional directional traders need:
- I don’t need the stock to go up a certain amount to make it worth my while…
- In fact, I don’t need the stock to go up at all…
- And I definitely don’t need the stock to hit a certain price by a certain date, like most options traders do.
In fact, all the opposite can happen:
- the stock can go up just a little (or a lot)…
- the stock can stay flat…
- the stock can even GO DOWN a bit!
And I still collect my money.
In fact, while most options traders are trying to outrace the clock… crossing their fingers and doing a rain dance to try to make their stock go up before their options expire…
I do just the opposite.
I sit back and every day that ticks off the calendar is one day closer to walking away without having to fulfill that promise.
The Takeaways
Some key lessons to learn from this trade:
- Up Your Odds – with income trading, you don’t have to be 100% right. You just have to avoid being 100% wrong. And that is a whole lot easier.
- Follow The Money – watching where the money is pouring into is a powerful way to know which way a stock could be headed.
- Make Time Your Friend – as an options seller, time is your friend. Most options traders are afraid of an option expiring worthless, but to an option seller, it’s music to our ears.
Trade well,
Jack Carter
P.S. If you want to get in on my next trade… Click here right away. Our stats show it’ll have a greater than 81% chance of landing us a winner. And I’d love for you to be there right along with me.
