If China Eases Up, TAL Could Fly

We’ve talked before about the Chinese crackdown on education. And it’s a move that has affected a ton of Chinese companies – among them, TAL Education Group (NYSE:TAL).

At one point this year, this was a $90 stock. Today, it’s in the single digits around $7.

But there’s some big money betting on a reversal…

Click to enlarge

Someone bought the September 17 $10 calls – but this screenshot is just a glimpse. On the day, 32,000 of these calls were purchased.

Now, the $10 calls are a good 60% OTM right now. But that just goes to show that this is a clear play on China lifting some of these tough restrictions.

If China does ease up a bit, then companies like TAL will likely see a bullish move – maybe even all the way $20!
I don’t hate this trade – but I’d structure it a bit differently. I’d look at the $7.50 calls instead of the $10 ones as a way to play some potential upside.

“Twice the Mark” on Thursday

This week’s Profit Takeover-exclusive live trading session kicks off on Thursday, August 12 at 12:00 PM.

We’re talking volatility, stocks on my Watchlist, and going through the current open positions in the portfolio – right here in the live room.

This is your only time all week to watch me trade live exclusively for Profit Takeover subscribers – that’s you! And I’m releasing a live trade during the stream – one that you’re only guaranteed to get into if you’re there, watching me trade it.

But guess what? That’s not the only time you can catch me live on Thursday…

Later, at 7:00 PM ET, is the biggest trading event of the year.

Bigger than our daily Money Morning Live shows…

Bigger than our weekly Profit Takeover sessions….

Bigger than anything we’ve ever done before.

It’s the Primetime Trading Summit – and it’s going to be home to some of the best trade recommendations we’ve ever released.

Register NOW for the Primetime Trading Summit right here.

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That’s two chances to watch me live trade on Thursday. Twice the Mark, twice the fun, twice the money – right?

I can’t wait for Thursday – and I hope to see you there… TWICE!

VIX Traffic Light

My VIX traffic light has been yellow for quite some time now.

But today, that’s changing.

Since August began, the VIX has slowly begun to negatively correlate with the S&P. When the market goes up, the VIX goes down – that’s exactly how it’s supposed to be.

On top of that, the VIX futures curve never fully went flat. It remains in a contango – and that means it’s time to admit that the VIX is probably heading lower, not higher.

With earnings season drawing to a close, I’m thinking the VIX will be back in the 15s this week. And as a result, my VIX light is red.

Mark’s Watchlist

  1. Caterpillar Inc. (NYSE:CAT)

The trillion-dollar infrastructure bill is set to pass through the Senate this morning, and construction manufacturer CAT is a great way to play it. I’m looking for shares to make a short-term pop and a run to $215 after the bill passes – and you can play that pop with the August $110 calls for about $2.85.

  1. Advanced Micro Devices Inc. (Nasdaq:AMD)

AMD has been falling since the beginning of the month, and I think it’s going all the way down and kissing $105 before it finds any real footing. That said, you can play the further downside with the August 13 $107 puts for a little over two bucks and see a profit by Friday.

  1. Bank of America Corp. (NYSE:BAC)

BAC looks like it wants to run to the all-time highs it hit back in June. This would bring shares over $43 and approaching $44. If that happens, then the September 17 $41 calls would double.

  1. Berkshire Hathaway Inc. Class B (NYSE:BRK.B)

Yesterday, I told you that I was looking at BRK.B for a post-earnings play. And I’ve found one. I’m looking at the September $290 calls for about $4.35.

That’s all for today, folks. Remember to register here for The Primetime Trading Summit, kicking off on Thursday at 7:00 PM!

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See you soon,

Mark Sebastian


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