Our Two New Trades Are Showing Signs of a Comeback By Larry Benedict, editor, The Opportunistic Trader Our offices were closed last Friday. So we’ve got a bit to cover today… At the time of your last update on June 28, we had just closed out the second leg of our Boeing (BA) trade. And we didn’t get a chance to cover it in full. So we’ll cover that later in today’s update. But first I want to look at our open trades. (As I covered in our previous update, I expect our put option on the Invesco QQQ Trust Series 1 (QQQ), which expires on July 19, to expire worthless.) The first of those is our put option trade on Apple (AAPL), which we opened on June 26. The aim of the trade was to capture an anticipated pullback. We did the same thing with AAPL earlier in June, which netted us a blended 57.5% gain. But as you can see in the chart below, the trade has gone against us so far this month… Apple (AAPL) 
Source: eSignal (Click here to expand image) There are a number of things I’m watching that could soon turn things around… As you can see, there has been a diverging pattern (orange lines) developing between the stock price and Relative Strength Index (RSI). A divergence like this often precedes a reversal. For that reversal to unfold, we’ll next need to see the RSI continue to track lower. And the moving average convergence/divergence (MACD) will need to roll over and head down. The other thing that caught my attention was investors’ reaction to the inflation data that came out yesterday… Inflation came in lower than expected, thereby pulling a potential rate cut forward to September. But AAPL reversed strongly on the day. AAPL is still trading well above where it was when we entered the trade. But if this sell-off gathers momentum, our trade could quickly turn around. It’s a similar story with our Tesla (TSLA) puts… As you can see in the chart below, we entered the trade a little too early. But the price data yesterday showed a strong reversal despite the bullish inflation news… Tesla (TSLA) 
Source: eSignal (Click here to expand image) We can already see a sharp reversal in the RSI… For our trade to come back to us, we’ll need to see that down move in the RSI continue. We’re looking for the RSI to break below support, as shown by the green line. We’re also looking for the MACD (blue) line to cross beneath the signal (orange) line, and pull it lower too. So let’s check out our closed BA trade… Our Closed Boeing Trade Our BA trade shows what this service is all about… We look for a stock that’s overstretched – in this case, oversold. And we look to profit when it reverses back the other way. And as we did with this trade, we aim to capture that move in a short period of time. So let’s see how it went… Trade: BA August 16 $190 Calls Bought on June 25 for $4.15 Sold half on June 27 for $6.50 (56.6% gain) Sold remaining half on June 28 for $6.10 (47.0% gain) Blended gain: 51.8% Holding period: 3 days (total for both legs) Boeing had a broad range of bad news, from manufacturing and safety issues to alleged fraud. And BA fell over 40% from its December 2023 high. But while that bad news kept on coming, the chart bottomed on April 25. And it went on to make a series of higher lows. Momentum continued to trend higher. So we bought a call option on June 25 to capture that up move. And fair to say, the trade went our way right from the start… With our position in good profit, we locked in some of those profits by closing half our position just two days later for a 56.6% gain. Then momentum began to stall the following day. So we closed out the remainder of our position for a 47.0% gain rather than risk giving up further profits. All up, we generated a blended 51.8% gain over a total holding period of just three days. Your Feedback Just a quick reminder that if you’d like to help spread the word of the benefits of becoming a subscriber, please consider taking a moment to rate The Opportunistic Trader on Trustpilot. And as always, if you have questions, suggestions, or any other comments, you can reach out to me at feedback@opportunistictrader.com. Happy trading, Larry Benedict
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