July 18th, 2023

Fast Capital Turnover Set to Continue as Earnings Season Ramps Up

The catchphrase on Wall Street these days seems to be “soft landing,” with the latest data showing inflation cooled off in June. Both the headline and core consumer price index (CPI) readings showed the smallest advances in more than two years. This news caused stocks to surge, with the S&P 500 gaining 2.4% last week.

In addition to better-than-expected inflation data, several major U.S. banks beat analysts’ revenue and profit forecasts for the second quarter thanks in part to higher interest rates and continued spending among consumers and businesses.

Furthermore, as Jeff Wood pointed out in Monday’s edition of Filthy Rich, Dirt Poor, the market rally “has expanded to include a broader range of stocks, reflecting increased diversity.”

This week will bring additional reports that will shed light on the health of the economy. These include today’s retail sales report and Thursday’s Philly Fed Manufacturing report. (See the full list of reports you need to be aware of this week here.)

Of course, earnings season is now underway, and this could pose a challenge to the recent bull run. According to Bloomberg Intelligence data, S&P 500 companies are expected to post a cumulative 9% drop in second-quarter profits. If that happens, it will mark the worst earnings season since 2020.

The nice thing about earnings season for us as option sellers, though, is the added volatility in individual stocks. This can help us capture higher premiums amid a persistently low-volatility environment.

Despite a lack of volatility, Options Income Weekly members have been closing out trades at a rapid pace. We booked three winners last week, earning $119 per contract in cash.

Our shortest holding time was less than 24 hours, while the longest was just three days, underscoring how quickly we’re turning over our capital. I discussed the one-day trade on The Trade Desk (TTD) in greater detail here.

Last week’s trade on Crocs (CROX) was our seventh winner in a row on the footwear maker this year and our 13th since we began trading it in Options Income Weekly back in October 2020.

Here’s a look at our CROX trades from 2023:

So far this year, we’ve generated $413 in cash from CROX with just one contract sold. Meanwhile, our average trade has returned 0.6% and our average holding time is just over six days.

Our other closeout last week was in a new name for Options Income Weekly members, as we executed our first trade in electric pickup manufacturer Rivian Automotive (RIVN).

Check out tomorrow’s edition of Filthy Rich, Dirt Poor for more on this trade and why option sellers should have this stock on their watch lists.

Trade Smart, 

Emily Norris
Managing Editor, Traders ReserveT

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