Monday, January 17, 2011

Set Yourself Up to Knock Down a 14% Five Week Return with a over a 91% Probability of Success!

Greetings Fellow Secreteer,

Welcome to expiration week and the last newsletter for our January/February credit spreads. We have two new plays to enter before we close out the January/February playbook and move into the February/March time-frame. Again, as with every expiration week consider closing out any plays that have already earned most of their credit.

And, as mentioned in earlier editions, whenever a credit spread has less than $0.05 remaining, that’s a great time to close out the trade and “Take the Money and Run!”

Of course there’s always the “option” to just let them ride into expiration. If the options expire worthless, you'll be able to keep ALL the credit and pass on any new commissions. With as low as volatility has been that's not such a bad idea right now.

Finally, for our last entries in our February playbook, we’re looking at:

February

• 12.61% - 13.53% Return on Investment, 90.62% - 86.11% Probability of Win.

• 9.89% - 14.42% Return on Investment, 91.07% - 85.64% Probability of Win.

The Markets and How They Affect Us

For the 7th week in a row, the SP-500 has continued to ride the bull marking the longest rally since May 2007. This ride has been fueled by a one-two punch of continued optimism, strong quarterly earnings and European efforts to reign in their debt woes.

The economy is on a bullish trajectory, volatility is at all-time lows and there is an expectation that the world’s largest economy will continue to expand well into 2011. We’re definitely in an environment that lends itself to jumping into the stock market and we're finally seeing inflows to stock funds. It is now estimated that goods and services produced will grow by an additional 3% after rising 1.8% in 2010. This marks the first substantial gain we’ve seen in GDP in the last three years.

The big driver this month is earnings---analysts predict that they should increase by 14% in 2011 and, out of the seven companies in the S&P 500 that have released their results so far, six have already beaten analysts’ estimates.

In spite of all that good news we'll remain cautious; there’s not a lot of justification for further gains and it might not take much to spark a reversal--like maybe the news of a high profile CEO to getting sick. The recovery we’re experiencing is being driven by policy support. - in other words, the extension of the Bush-era tax cuts, renewed emergency jobless benefits, 2011 cut in payroll taxes, QE2 feeding the market a whole lot of cheap dollars, etc. If that support changes in any way this market could be a long ways in the air with no support.

We'll continue to let the market dance while we collect the gate--up, down or sideways, as long as the walls (our sold strikes) don't blow out we'll make money.

What are the Secrets of the Week?

Our 1st play is on an equity that offers a 12.61% - 13.53% return on investment with a 90.62% - 86.11% probability of win. Our 2nd play is also on an equity which offers a 9.89% - 14.42% return on investment with a 91.07% - 85.64% probability of win---so let’s get started...

You can get in on this week's trades along with two new high-probability trades per week by clicking here now: http://www.cashflowheaven.com/ws

God Bless and have an awesome trading week!

Robert

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