Over the past few days, I've gotten several great questions from you about what I see happening in the markets next.
You've also been asking about the best ways to manage your trades for maximum profits and minimal risk.
And I want to make sure you get the answers you need right now.
So let's get started...
Summer Mailbag: Your Questions, Tom's Answers
To recap...
1. What do you see happening in the markets this month? Which sectors and strategies could offer the best profit opportunities?
Based on my proprietary tools, the next two weeks are showing a lot more bullish opportunities than bearish ones. This means that the most popular stocks in the market right now are showing a tendency to climb higher during the first three weeks of the month. I'll be giving you my outlook for the rest of the summer - and the best ways to profit - later this week, so stay tuned.
2. I'm newer to options, and my trades often don't get filled the same day. How long should I wait before canceling my order and starting over?
It depends. If you're trading weekly options, I don't encourage keeping your order open for more than a day. If you're trading 30-day options, then I'd cancel the order if it doesn't get filled within a week. And if you're trading longer-term options, like long-term anticipation securities (LEAPS), you can really keep your order open for up to month - particularly if you're just waiting to get a better price.
3. How do you calculate limit prices (entry and exit) for spread trades?
I take the worst possible fill price and the middle price between the bid/ask prices and work my way through them. I'll walk you through exactly what I mean in my video above.
4. What happens when an option contract is going to expire worthless? Do you need to act on it in any way - or can you just let it go?
You can do both, but I generally try not to let an option run until expiration. For example, in my premium service, Money Calendar, I choose options with expirations that run past the trade's end date. That way, there's still a lot of time value left when it's time to exit. That said, there are cases where letting the option expire worthless is better than to exit early and pay commissions, such as when the fees you'd pay to exit the trade cost more than what you paid to get in.
The exit strategy I recommend to my Money Calendar readers has been working extremely well so far this year. In fact, we've closed out six triple-digit winners in the past month alone for a total 745.51% windfall.
Now, I'm releasing two new trades right before opening bell Monday morning, and I expect these to return at least 233%.
5. After Amazon's recent buyout of Whole Foods, do you think Wal-Mart will be able to keep up? And for how long?
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There are two parts to this answer...
First, when you have a big company that makes a strategic move like Amazon.com Inc. (Nasdaq: AMZN) did, there's typically one other guy on the block that can do it, too. So in my opinion, Wal-Mart is that other guy that can make this work. That said, I do think it'll need to team up with some technology firm to do it. Now, it's already started to see strides in its mobile online ordering, which means it's working. But it's going to need to step it up from here to compete with Amazon.
Second, according to my stock chart on Wal-Mart Stores Inc. (NYSE: WMT), implied volatility (IV) went down after earnings, meaning investors weren't feeling too nervous about the stock. After the buyout, IV jumped slightly but then started to come back down again. That tells me that the fear's coming out of trading that stock.
So from a trading perspective, the stock looks pretty good. In fact, I could see it getting back to its high of $80 this summer.
And soon, I'm going to tell you exactly what else I see happening in the markets this summer.
So stay tuned - and I'll talk to you soon...
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The post What the Stock Market Will Do Over the Next 16 Days - and How to Prepare appeared first on Power Profit Trades.
About the Author
Tom Gentile, options trading specialist for Money Map Press, is widely known as America's No. 1 Pattern Trader thanks to his nearly 30 years of experience spotting lucrative patterns in options trading. Tom has taught over 300,000 traders his option trading secrets in a variety of settings, including seminars and workshops. He's also a bestselling author of eight books and training courses.