This week, we talked about two really strong sectors: energy and travel.

And I gave you three ways to trade each of them.

We also broke down my favorite indicator – implied volatility – and walked through next week’s earnings season kick-off.

Listen – next week is going to be big. We’ve got the financials starting third-quarter earnings and October’s monthly option expiration.

Together, I think we could be looking at a potential market sell-off that lasts all week long.

So, as we head into the weekend, I want to make sure you’re armed with all the trading information you need – which is why, today, I’m bringing you a special Ask Me Anything edition.

Today, we’re talking about covered calls – a great way to protect your portfolio…

The top indicators to use to find quick-hit trades…

And exactly what to watch come third-quarter earnings.


First up, let’s talk about one of the most basic and easiest option strategies you can do – covered calls.

We’ve actually talked about covered calls here in Profit Takeover before – but it never hurts to have a refresher…

Especially ahead of a potential red week.

To place a covered call, you must first own the stock – which it sounds like Bob here does. By selling calls against that stock, you can produce yield – that’s the biggest advantage to this strategy.

If you’re long XYZ stock for $30, and you sell a $33 call at $1 with 30 days to expire – and repeat this every month – then over the course of a year, you could make thousands of dollars in income.

The only disadvantage of selling calls is if the stock goes on a run, you could get your long stock called away – meaning you lose your original position.

I like to use something called the Wheel Trade. This involves selling puts on a stock at a given price and collecting the premium. If I get assigned on the stock, then I start selling covered calls on it.

When the stock eventually gets called away, I start selling puts again – and the cycle continues.

Next up, Larry’s got a great question – he’s talking indicators.

See, you should never just toss a bunch of cash into a trade willy-nilly. You shouldn’t base your trades on what the media says, what Reddit says, what companies you like or don’t.

Indicators give you real, hard evidence to back up your trades before you put any money in them. Moving averages, bollinger bands, volume – indicators like these are the closest you can come to predict the market’s future.

There are a ton of indicators out there – but Larry wants to know my favorite.

And today, I’m going to tell you about two…

First up, let me tell you about implied volatility.

Implied volatility, or IV for short, is a measure of how far a stock is going to move in the future.

Check it out here, on Apple Inc. (Nasdaq:AAPL):

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IV on AAPL, Dec 2020-Oct 2021

Now, let’s talk about historical volatility – HV for short.

HV is essentially the opposite of IV. Where IV is a measure of a stock’s future, HV measures how far a stock has moved in the past.

Click To Enlarge
HV on AAPL, Dec 2020-Oct 2021

Alone, these indicators tell you a little bit about a stock. But together, they can tell you a lot.

Introducing, the IV/HV blend:

Click To Enlarge

This week, I explained how to use the IV/HV blend to create a cheap option trade.

Want to see me explain it in action? Check out this Money Morning LIVE clip:

The IV/HV blend is a great way to find cheap options. But Larry specified quick-hit trades. And if you’re looking for day trades, then the VWAP is your thing.

It stands for volume weighted average price, and it gives you a minute-to-minute view of what the market is likely to do next.

But I’m no expert – that’s all Kenny Glick. And I’ll let him do the explaining in his free live event on Wednesday, October 13, VWAP Locked & Loaded. Reserve your seat right here.

During this event, Kenny will show you how to trade earnings – giving us the perfect segue into Sarah’s question…

I’ve got a few stocks on my radar this earnings season. One of them is Apple Inc. (Nasdaq:AAPL), which has been getting hammered lately.

The last time AAPL had a rough patch, earnings were great – and they sent the stock off on a run. I’m watching AAPL closely to see if that happens again.

I’m also watching United Parcel Service Inc. (NYSE:UPS) and FedEx Corp. (NYSE:FDX) because of the supply chain issues hitting the shipping industry right now.

Lastly, I’m looking at Walmart Inc. (NYSE:WMT), a stock that landed on my Watchlist this week. I want to see what they have to say about retail and how they’re dealing with the supply chain problems as well.

I’m actually hosting a live earnings trading series over the next three weeks, breaking down the third-quarter reports. If you want to get my take on each of these names after the reports come out, then make sure you tune in:

Now, this live series is for Profit Revolution members only. If you aren’t a member yet, then give us a call at 877-212-9163 to join!

Have a great weekend,

Mark Sebastian



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