Portfolio Action Required: Exit AAL & F Now

Portfolio Action: Exit AAL & F Now

On Friday, I did a complete portfolio review, addressing all of our open positions.

And today, we’re taking action on two trades that are running out of time: the Ford Motor Co. (NYSE:F) August 20, 2021 $16 call and the American Airlines Group Inc. (Nasdaq:AAL) August 20, 2021 $23 call.

With just one month until expiration, both of these trades are at a pretty steep loss. So, let’s exit now to preserve capital for future trades (your next of which is coming tomorrow, right here).

Here’s what to do:

Sell-to-Close the F August 20, 2021 $16 call AND the AAL August 20, 2021 $23 call at market.
Now, it’s important to know that my outlook on these stocks hasn’t changed – especially when it comes to airline names like AAL. I’m still watching this stock – and we may have a better trade on it coming soon.

I can guarantee this – we will have a new trade recommendation tomorrow at 12:00 PM…

Tomorrow at 12 PM: Let’s Dissect This 103% Winner

Last week, I went live to tell you how to trade earnings. During the live event, I released my second-best earnings trade. But after the event, I texted out my best – a put on Apple Inc. (Nasdaq:AAPL) that’s up 103% this morning.

This trade was exclusively for Profit Takeover members signed up for text alerts. If you received it, then now’s the time to exit.

If you didn’t get my AAPL trade, then it’s not too late to sign up for text alerts – just click here. The next time I send out a text-exclusive trade, then you’ll be on the list to receive it.

I’m going to do a full review of this trade in my next live event – which kicks off tomorrow at 12:00 PM ET right here. It’s also where I’ll release my next Profit Takeover trade recommendation.

All you have to do is show up – don’t miss it!

VIX Traffic Light

My VIX light has changed from red to yellow today.

Remember – when the VIX is in a contango, that’s when we feel safe. But when the VIX is in backwardation, well, things change.

And as you can see, the VIX is in a partial backwardation right now:

 

 

 

 

 

 

 

 

So, what does a yellow light mean? Well, we can expect some wicked swings and volatility in the market. We need to be careful – because there’s potential for a true volatility event here.

Now, this high volatility event could last one day – or it could last weeks. We don’t know the timeframe yet – but that’s exactly why I’m keeping an extra-close eye on the VIX right now.

High volatility tends to mean that there’s fear in the market. But you don’t have to be scared – because here at Profit Takeover, we’re traders – and high volatility means the opportunity to make money.

Mark’s Watchlist

We’re analyzing WBA’s IV, examining some big money flow in DKNG and UBER, and talking oil with XLE.

Get all the details on today’s Watchlist right here…

1. Walgreens Boots Alliance Inc. (Nasdaq:WBA)

At one point this year, WBA was one of my favorite stocks. But it’s been falling fast. Right now, shares are down almost 20% from their 2021 high. And share price isn’t the only thing dropping. WBA’s implied volatility (IV) is at the lowest it’s been all year.

Usually, IV rises as a stock falls. That’s the natural order of things. But when the stock and IV fall? That means traders aren’t hedging – they’re just dumping the stock. Smart money is getting out of dodge, and I wouldn’t be surprised to see WBA drop all the way to $43.

At that point, however, I think we could see some interest pop. IV could increase from there – and that’s when I’d start selling puts on this name. But for now, it remains on my Watchlist – not in my portfolio.

2. Draftkings Inc. (Nasdaq:DKNG)

Big money is coming to play in DKNG – in the form of a strangle:

This buyer bought 35,000 of the October 15 $40 puts and 35,000 of the October 15 $60 calls for $3.88 a pair. This is a huge order – and a massive play on volatility.

Essentially, they’re looking for a big move – either below $40 or above $60. I think we could see some real fireworks after a trade like this. Right now, DKNG sits at about $44.50 per share. Before this trade’s expiration, I think DKNG could either be at $25 or all the way up to $75.

3. Uber Technologies Inc. (NYSE:UBER)

There’s another big money play on my radar today – this time, in the form of a straddle on UBER:

In this case, the trader bought 15,000 contracts of both the September 17 $50 call and the September 17 $50 put. They’re looking for a move above $57 (strike plus premium paid) or below $43 per share (strike minus premium paid) in order to win on this play.

Essentially, it’s another IV play. The trader is looking for IV to blow higher. And I like this trade – I’m bullish on UBER. But instead of buying a $7.25 straddle, you could simply buy calls on UBER to profit on the upside.

4. Energy Select Sector SPDR Fund (NYSEARCA:XLE)

Oil is back on my mind this week. The OPEC deal sent prices falling lower, but I’m looking at this as a buying opportunity for stocks like Exxon Mobil Corp. (NYSE:XOM) and Chevron Corp. (NYSE:CVX) – and ETFs like XLE.

Just a few weeks ago, XLE was near $60. Today, it’s $47. This name is way oversold – and I’m bullish on the ETF through the rest of the summer. For a short-dated play, I’d look at the $48, $49, or $50 calls expiring in September.

Speaking of XLE – check out today’s impact money trade…

Today’s Impact Money Trade

Energy is clearly in focus today – and it looks like we have impact money pouring into the weekly August 6 $45 puts on XLE:

Click To Enlarge
Now, it looks like this trader is selling to open 10K of the XLE puts – that means, like us, they’re bullish on the energy ETF.

Retail attention – check. That’s us. And now, we can check off big-money interest as well – making XLE a two-factor authenticated name.

I’m releasing our next Profit Takeover trade live tomorrow at 12PM ET. Don’t miss it – bookmark this page now.

I’ll see you then…

Mark Sebastian

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