Hola amigos! 

 

We are walking in into this week with a little bit of turbulence behind us, as last week closed with a nice pull-back. Thursday and Friday sold off nicely. To be honest, I was a little bit surprised with Friday’s move but hey, bring it on!! Volatility is always welcomed by options sellers. Now you are probably wondering: is this another bullish retracement and the market will keep rolling this week, or is it finally the change on the direction that we’ve all been waiting for so long now. Well, good thing is that we do not have to guess, we just have to prepare a trading plan for either situation, and then apply the proper one once Mr. Market tells us where he’s headed to.  

Some may argue that it’s pull back, others that it’s a direction change. What no one can argue is that it’s an opportunity for options traders. Remember the fishing analogy? (Link to the blog https://tackletrading.com/building-the-garden-part-1/) that’s exactly what I’m talking about. Scary people means opportunity, in one direction or another. But WAIT, we shall not rush our trades until we see the opportunities clearly. So this week, let’s look for potential candidates and prepare to trade the pull back as well as protect/cover our existing trades. Into it now…   

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Now, let’s trade… 

WARNING: We are between 40-60 days from earnings in most of these picks, so by suggestion would be to be careful with the expiration selected, make sure you understand how volatility build-up could affect this trade, and plan accordingly. 

  

SPWR 

SunPower has a nice little rally a couple of weeks ago after it announced some exceptions from the steel tariffs. However, it ran out of gas quickly and started retracing back to support level around $6.80. I currently have my shares covered at $6.5 and will probably let them take them away from me. If SPWR moves down a little more I am a serial buyer anywhere at or below $6.5. Watch out, earnings coming up. If you are looking to buy a cheap stock to start working on your cov calls skills, then naked-puts shooting for assignment is a good way to go. So far, $6.5 has  been very loyal and it’s approaching it. 

  

TSLA 

TSLA had an explosive combination this week TSLA. Elon getting sued, then settling with SEC, then back to twitter to trash-talk about them and finally the general market sell off, make TSLA basically go down -10%, back up +15% and back down -10%, violating strong support/resistance levels as they didn’t even existed. Las week I had two different bull-puts spreads on, one of which I exited once it broke below $280 and I am still playing the second one, which is down in the $230-$220 level. With everything going on plus earnings coming up, this is probably a good time to stay out if TSLA. I will actually ride my bull-put spread with a kind of protective put on it, just because I’m already in. Post-earnings, I’ll be back at it. 

 

 

NGR

Apologies for the fuzzy chart. But a few things to point out on NRG today. First, I’m seeing one of my favorite things to see when I look at a chart and that is basically when two patterns are combined and indicating the same potential move. NRG retraced to $36.8 which is a previous resistance from earlier last week, as well as the bottom of the bullish channel. Second, even though the market moved down on Friday, NRG had a green candle pivoting from that support level which is great. So I am liking this set up quite a bit. If the market keeps running this week, NRG has potential to go.   

 

REGI 

Still expectant on this one. Consolidating nicely in a very narrow range, I thing REGI could break above $30 and run. We probably still have some time left for a naked-put or bull-put spread play before earnings, right below $25 ideally. And, of course, this is a great candidate to park some profits from Step #1 of the system (cashflow from Dirty List) and compound on REGI shares.

 

 

 

   

X 

Still sleeping between $29 and $31. I expected a little bit more movement on X after last week’s announcement from Mr. Trump about the new USMCA (ex-NAFTA) deal, potentially helping out Mexico and/or Canada steel producers. But no, nothing. X did not care one bit. Anyways, we should not forget that this puppy is a mover and sooner or later will wake up and keep going. If no changes in pattern after earnings (which I doubt), I will definetely play back naked-puts or bull-put spreads below$28. 

 

 The rest of the Dirty List picks this week don’t convince me, as they are either undecided on the direction, or with a messy chart, or very close to earnings. So more to come next week though. 

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Its LETTUCE time 

In case you didn’t know, Autumn means greens. So if you are reading this, go buy some soil and lettuce and kale seeds A.S.A.P. As this is the time. Same as with credit trades, slow but steady and in little chunks, the garden is growing. I have a few rounds of greens planted as you can see in the pictures below. Some of them already half-way grown, and most of them just flourishing. I estimate in about two weeks from now to prepare a big pot of soil, about 2ft x 4ft, and plant all this baby greens together to give them space and sun in the rooftop.  

I am having a hard time with the tomatoes, though. I don’t know if it was the 45 raining days this summer that flooded them and semi-killed them, or is the autumn season that makes them go brown and sad. I promise to study the tomatoes a little bit deeper rand keep you posted. In the meantime, there are two little ones that keep growing and I have two small plants that, if they survive, I will transfer them to the rooftop with the greens as well. 

 

More to come in the garden in the upcoming blogs folks, stay tuned. And if you are growing something too, please post it somewhere and tag me or the team so we can see the progress…#EHblog. 

Cheers, 

Franco.