Trading tip of the week…
There’s really no “crystal ball” when it comes to the market – but there’s steps you can take to help prepare for what’s to come.
And one of my favorite things to do to prepare in a volatile market is to look at the CBOE’s VIX. VIX stands for volatility index, and it measures the stock market’s expectation of volatility based on S&P 500 index options.
This helps me get an idea of what I can expect the market to do.
Right now, we have a VIX of 28, which means volatility is expected to be higher between now and the end of the year. But that doesn’t mean you need to panic. Volatility isn’t the enemy – and in fact, for options traders, volatility is a friend.
With that said, with this type of volatility, a plan is essential. So, be sure to plan your trades and trade your plan. And for now, I would focus on short-term plays with options versus putting your money in the market for the long haul.
And here’s a quick way you could do just that…
I like a put setup for a nice bearish play on the current volatility. Tencent Music Entertainment Group (TME) has caught my attention and I’d be looking for an expiration date of at least four weeks out and a limit price that is comfortable for your risk portfolio. And just like that, you’ve got skin in the game.
The story of Costco…
As most retail struggles to survive the pandemic, a select group of stores has found their businesses boosted. And one of those stores is big-box retailer Costco. Costco saw a surge in shopping in its most recent quarter. This uptick in consumer traffic boosted its annual profit to above $4 billion. And while the knee jerk reaction is to celebrate that – there’s a downside that comes to a booming business.
While raking in $4 billion is good news – the company also announced that it spent an additional $281 million in the 16 weeks ending August 30. These costs included hazard pay for employees and increased costs regarding sanitation and other safety measurements.
These increased expenses and the impact of those expenses on profit margins sent investors running, sending Costco shares lower. And shares continue moving down despite Costco beating expectations all around. Shoppers spent a record $52.3 billion, up nearly $6 billion from a year earlier. Sales at stores jumped 14%, excluding the impact of lower gas prices. And online sales nearly doubled, rising 90%.
Now, Costco’s performance is incredible given the current state of the retail world – but I think this story is an important reminder to make sure you see the full story and not just one piece of the picture.
Earnings report that has caught my eye:
It’s another week of earnings reports.
And I know you don’t have time to be sifting through all the numbers and news.
So, here’s the one I’ll be focusing on, and I think you should too:
Micron Technology, Inc. (MU)
Micron happens to be one of my favorite stocks, and I’ve made some fast cash playing it. But that’s not the only reason why this stock has landed on my radar. Over the last four quarters, Micron has beat earnings by an average of 10.1%. And I’m expecting no different this year.
Micron is a tech company that produces computer memory and computer data storage, including dynamic random-access memory, flash memory, and USB flash drives. And thanks to the pandemic, they’ve seen sizable growth in business over the last few months.
And right, now Micron is expecting revenues to be in the $5.75-$6.25 billion range. This would suggest an increase of 21.4% from last year. And that massive jump could be a trigger for profits – if you play it right.
Now, MU is set to report earnings tomorrow on September 29. And I’m looking forward to seeing what this stock could produce. With that said, I’ll be sure to keep you updated, and if it’s time to make a move – I’ll make sure you know.
There’s Always More than Meets the Eye
At first glance, Costco’s huge profit is very positive news… possibly even positive enough to make someone want to invest.
If a business can generate that kind of revenue during a time like this, the prospects are limitless, right?
Well, like I mentioned above, you need to examine all aspects of a company before investing your hard-earned money in it – a quick snapshot never tells the full story, which frequently includes increased costs and likely upcoming market trends.
But who as time to dig that deep into every opportunity they come across? S.C.A.N. does!
S.C.A.N. is the trading algorithm I created to do all the heavy lifting that comes with analyzing every data point to determine your best chance to profit.
It’s the crux of my 1450 Club trading service, and today is your chance to gain access.