Three New Year Trades

Apple’s overbought, the airlines are oversold, and Ford is back, baby.

I’ll go through each of the names below during my 1:30 PM ET Profit Revolution show… which you can tune into for FREE, this week only, right here in the main room.

  1. Apple Inc. (Nasdaq:AAPL)

Everyone’s favorite blue-chip had quite the run yesterday, gaining more than 1.7% on the day.

After that run, I think AAPL is overbought. I expect to see the stock take a breather today and tomorrow, potentially dropping back below $175. And this week’s $175 puts are only $0.33.

  1. Southwest Airlines Co. (NYSE:LUV)

DAL was on my Watchlist yesterday – and today, it’s LUV’s turn. Airline stocks got beat up Thursday through Monday after a wave of Omicron-caused flight cancelations – but we weren’t the only ones looking to buy the dip.

LUV is rallying today and could be on a move higher through the end of the week.

  1. Ford Motor Co. (NYSE:F)

Guess who’s back? F is back… alright!

Okay, Backstreet Boys aside – F broke above $20.50 on Monday, and if the stock holds it might be set up for an extended run.

You know I’m always bullish on F. I’m long calls here, and I continue to like the stock to $25 by January expiration.

The Single Indicator Turning my VIX Light Yellow

Yellow Traffic LightI look at four indicators when determining the color of my VIX traffic light.

First, the correlation between the S&P and the VIX. These two are supposed to inversely correlated – meaning when the S&P goes up, the VIX goes down. That’s what we’re seeing today, so this indicator is red.

Next, I look at the VIX futures curve. Today, it’s in a contango – which translates to another red indicator.

Then, we look at the VIX’s implied volatility (IV). It’s low today, which makes my third red indicator…

But my fourth indicator is one of the most important. And today, it’s yellow…

Which is enough to turn my VIX traffic light YELLOW today, meaning wild moves ahead.

Despite three of my four signals being red, my VIX light is yellow today, because the VVIX remains elevated.

The VVIX Index is essentially volatility of volatility. And when it’s high, that means there is demand for VIX options out there.

Now, while I think the VIX is likely to drop, the odds for a strong volatility rally are still out there, especially as we head further into the week. Trading volume may be low for the holidays, but remember that the market is still open for the whole week…

Meaning anything could happen.

Big Money’s Next Target – The Amazon of Korea

Coupang Inc. (NYSE:CPNG) is sort of like the Amazon of Korea. This stock has been moving higher – and today, we saw big money flow into a massive diagonal spread:

A diagonal spread involves buying two different call options on the same underlying stock with different strike prices and expirations…

Which is exactly what this big money trader did, buying the December 31 $30.50 calls and the January 7 $30 calls in a 13,000 contract diagonal call spread.

The customer thinks that CPNG is going to make a move higher through the end of the week… but slowly. Then, in the new year, when the $30.50s roll off, they expect a big move higher from there.

CPNG isn’t a stock that’s often on my radar. But this isn’t the only short-dated bullish flow I’ve seen on the ecommerce stock…

In fact, I’ve seen big money buy the January 21, 2022 $30s, $32.50s, and even the $35s.

CPNG opened at $29.40 today. But someone knows something… and thinks this thing could head 19% higher in the next month.

And this would be a smart trade to piggyback.

The CPNG January 14, 2022 $30 calls only cost $1.00, and if the stock pops as high as the big money is betting on, then you could kick off the new year with a nice asymmetric return.

Remember – I’m going live today at 1:30 PM ET for my daily Profit Revolution trading session.

And today, you can actually tune in and watch for FREE.

Get a taste of what my rebels watch every single day…

Click here to tune into today’s show and hear even more on my VIX light, big money flow, and watchlist stocks – PLUS get today’s Asymmetric Trade Recommendation.

See you there,

Mark Sebastian
Founder, Profit Takeover


Leave a Reply

Your email address will not be published.