27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.
The importance of timing was discussed on Wednesday's PreMarket Prep show, along with the fallout from the brokerage house wars — and a survey of the damage from the first day of the quarter.
Rough Start To The Quarter
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What started out as a good day Tuesday was submarined by the poor manufacturing data released at 10 a.m.
The data showed further evidence of a slowing economy that may turn into a recession. The technical damage was severe, and now the market has a lot to prove if it is to make new all-time-highs by the year's end.
Timing Is Everything
At the top of show, the PreMarket Prep co-hosts discussed one of the few issues that we both have in our long-term portfolios: The Stars Group (NYSE:TSG). It's a good news-bad news scenario.
The good news is that the issue was taken over last night. The company was purchased in an all-stock deal for $22 per share by Flutter Entertainment, a bookmaking company traded on the London Stock Exchange.
The bad news is that even with takeout, it will be a losing trade for both of us.
The reason: we were too early with our investment. In November 2018, we decided that The Stars Group was a way to play the evolution of sports gambling in America.
Unfortunately, we had the idea and made the investment when the issue was in the $25 area. After never adding to the position at lower prices, the takeout at $22 makes it a losing investment.
It's a good example of how, even if you have the right idea, timing your entry is everything.
Only The Strong Will Survive
A good portion of the show was dedicated to the brokerage war that was instigated by Charles Schwab Corporation (NASDAQ:SCHW) with the introduction of commission-free trading.
This had a devastating impact on the brokerage issues, which has continued in Wednesday's session.
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TD Ameritrade Holding Corp. (NASDAQ:AMTD) has followed Schwab's lead in offering commission free-trading.
It was concluded on the PreMarket Prep show that these issues are in deep trouble, and many will have to readdress their business models.
Although it is tempting to try and pick a bottom, the hosts preached caution and said it may be prudent to wait for them to stop declining before attempting a long position.
Co-host Dennis Dick, a top market structure analyst, shared his views for the industry moving forward and how the recent news may bolster the "payment for order flow" revenue method with regulators.
Introduction To StockCharts
Midway through the show, David Keller of StockCharts.com joined the broadcast.
He showed off a few of the platform's bells and whistles and shared his a few of the bells and shared his technical take on a few different issues with his favorite technical analysis tools.
Thursday's Show
On Thursday's show, Marc Chaikin of Chaikin Analytics will join the broadcast at 8:15 a.m.
Chaikin will discuss changes to his Market Flow indicator in light of the poor price action over the last few days.
PreMarket Prep is a daily trading show hosted by prop trader Dennis Dick and former floor trader Joel Elconin. You can watch PreMarket Prep live every day from 8-9 a.m. ET here. The replay can be found on Benzinga's YouTube channel, and the podcast is on iTunes, Google Play, Soundcloud, Stitcher and Tunein.
Related Links:
PreMarket Prep Recap: End-Of-Quarter Price Action, Insider Buying Strategies
PreMarket Prep Recap: Micron Earnings, Wells Fargo's New CEO
27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.