RECESSION COUNTDOWN: 7 DAYS
Just 7 more days until July 1 – when we’re set to hit the official recession benchmark: two consecutive non-growth quarters.
Fortunately for us… Shah Gilani and Tim Melvin have cooked up a Recession Action Plan. (Tim also has a plan to get some better headshots taken.)
Here’s what’s in the plan: four Actions to Take to protect and grow your wealth…before the global rout upends millions of Americans’ lives.
You can get all the details on Tuesday the 28th at 8pm – conveniently, a couple of days before my RECESSION CLOCK hits midnight.
He’s opening up his premium room today, to everybody, for noble purposes of recession prep.
I think Kenny will also be there, for whatever reason.
Also, Tom has a new trade, as always on Fridays. Go here to grab it.
The Ghostbusters Do Their Own Taxes
The equities market is showing a bit of a bullish pulse.
This isn’t a market call that we’ve found a market bottom. Many a trader has lost serious cash trying to pick tops and bottoms of markets, and you won’t see that happening here.
But we do see a pivot low slightly at/near 365 in the SPY.
The last few days have seen bullish reversal days and the SPY has not taken out the recent pivot low.
Now, just as soon as you are reading this, the markets could be rolling over. Should the markets NOT roll over and continue to consolidate in prep for a burst higher, a bullish Money Calendar setup is being highlighted.
And there’s a Call Debit Spread option idea coming your way on Intuit Inc. (NASDAQ: INTU)…
Intuit, Inc. (NASDAQ: INTU) is a software stock from the Technology Sector.
They provide financial management/compliance products and services for consumers, small businesses, self-employed, and accounting professionals. They do all this in the U.S., Canada and internationally.
If you all are familiar with the QuickBooks software and all their applications, you know this company.
Option Scenario: Call Credit Spread
The pricing on the options is too expensive for a straight long call option and so we will highlight a way to hedge a long call. We’ll sell to open a call on the same order ticket, and that the sold to open option will be of the same month expiry, but at a different strike price.
INTU shows it has traded higher 9 of the past 10 years.
The way to realize max profitability is for INTU to be trading above the sold strike in the debit spread at expiration.
The option gets exercised at the sold strike and then the account can assign the stock at the bought strike. Basically, the account would be selling the stock at the sold strike and buying it at the lower bought to open strike making the difference in the strikes offset by the debit up front to open the trade.
This is called exercise and assignment (or assignment and exercise) and should be done automatically with your broker. Check with your broker how this works with their firm — if it’s not done automatically, you may have to be on the phone with them at expiration to make sure it executes as it should.
In getting a fill on a spread, we don’t need to specify specific prices for each option leg in the trade. We don’t care what price the Bought to Open strike or the Sold to Open strikes get filled at, just so long as when they are matched up on the order ticket the cost to do so does not exceed the limit price of $2.50.
This is hedged, but it’s a bit expensive, so we’ll classify it as Dollar Slots.
Here’s what to do:
DOLLAR SLOTS: TOM
Action to Take:
Buy to Open an INTU July 29, 2022, $395 Call and on the same order ticket,
Sell to Open an INTU July 29, 2022 $400 Call at net debit of $2.50.
Enter as a Good til Canceled order (GTC).
June 24 2022