It’s safe to say people have lost their minds.
Whether it’s at a political rally, staring at the eclipse, the latest headlines that people applied sunscreen to their eyes to watch the eclipse (which just can’t be true), geopolitical tensions, or people leaving their pets tied to trees during a Category 4 hurricane, rational thought has gone out the window.
We can even see a lack of rational thought watching the herd reacting to news it already reacted to weeks ago. In mid-June 2017, Amazon.com announced it was buying Whole Foods in a multi-million dollar deal. It sent shockwaves through grocer stocks.
Kroger (KR) for example, plummeted from $30 to $22 in days.
The negativity was fully priced in at the time.
Then, when Amazon announced its deal with Whole Foods would close today, Kroger fell another 8% last week, even though the news was already priced in. We believe the latest pullback is nothing more than a temporary setback. What we have to remember here is that the demographics of Whole Foods vs. Kroger is different.
Sure, Amazon may be a temporary disruptive force in the grocery business, but it doesn’t mean doom and gloom for stores like Kroger.
In fact, we’re using the latest pullback in KR as a buying opportunity.
There are two ways to trade such an opportunity. One, we can buy the underlying stock at market prices. Or, buy to open the KR January 2018 22.50 calls at market prices.
Other than this idea, we hope that you’re enjoying Trader’s Daily so far.
We are open for any comments, or questions you may have. We are still working on new ideas to add to these, as well and appreciate your feedback.
NKE stock -- $53.50 entry
NKE October 2017 55 calls -- $1.35 entry
We issued a new trade on Nike (NKE) and on the NKE October 55 call. Since the trade was opened, the stock has been steadily moving higher.
CELG stock -- $128.55 entry
CELG October 2017 130 calls -- $4.20 entry
This has become one of my favorite trades to date. Still oversold, the stock exploded more than $3 intraday, Tuesday. We still have a target price of $134, near-term. If you’re not a fan of options, we noted, you might want to consider the stock, too.
TrueCar (TRUE) stock -- $16.75 entry
TrueCar October 2017 16 calls -- $1.50 entry
TrueCar January 2018 16 calls -- $2.35 entry
On August 15, we recommended buying TRUE, as well as the October 16 calls and January 16 calls. Shortly after recommendation, the stock began to tick higher from oversold conditions. We’d like to see a near-term test of $17.50.
Vanda Pharmaceuticals (VDNA) stock -- $16.05 entry
VNDA October 2017 16 calls -- $1.70 entry
We spoke about this opportunity just the other day. After a nice break higher, it did pull back slightly. But we continue to hold as the stock begins to break higher. It last traded at $16.30 on Friday.
VIX October 2017 15 put - $2.50 entry
VIX October 2017 14 put -- $1.75 entry
Pro Shares Short VIX Short-Term Futures ETF (SVXY) -- $78.40 entry
Velocity Shares Daily Inverse VIX Medium-Term ETN (ZIV) - $71.35 entry
Each remains a hold, as volatility begins to die down again. We’d like to see the VIX drop back below 10, near-term. In fact, we’re almost there. The VIX fell another 95 cents on Friday to 11.71.
Zillow Group (Z) -- $44.75 entry, exited half for win
Zillow Group (Z) November 2017 45 calls- $3.60 entry, exited half for win
While the stock continues to break lower, we continue to hold. We already exited half of the stock and the November 45 calls in early August 2017. We currently hold the second half of each position. As the stock begins to bottom out at $38.48, we may open a new trade on the stock.
Advanced Micro Devices (AMD) -- $13.30 entry
Advanced Micro Devices (AMD) September 2017 13 calls – $1 entry
AMD is beginning to recover nicely. We see no reason to exit this trade. We have a target of $14, near-term.
Randgold Resources (GOLD) September 2017 95 put -- $1.60
Randgold Resources (GOLD) September 2017 92.50 put -- $2.40
DB Gold Double Short ETN (DZZ) -- $5.75
Continue holding these trades, as well. Gold has been all over the map again with tensions at home and abroad. However, the metal is aggressively overbought and ready to come down along with Randgold.
FireEye (FEYE) stock -- $14.65 entry
FEYE December 2017 14 calls -- $1.70
FEYE December 2017 15 calls -- $1.35
FEYE now trades at $14.50. We’d like to see a breakout with a potential test of $15, near-term. Hold. The stock is just beginning to pivot from oversold conditions.
Stay tuned for more.
Ian L. Cooper