The conference committee on the budget impasse claims they have reached an agreement.

The news came after 8:PM on Monday and the S&P futures shot up 15 points. They have since cooled to 12.50 but that is still a decent gain and could trigger some short covering at the open.

However, the terms of the agreement are causing trouble in the president's base. There will only be $1.4 billion allocated for 55 miles of "fences" and no walls allowed. The number of ICE detention beds would be reduced by 17% from 49,057 to 40,520. This will force ICE to release roughly 8,500 illegal immigrants with other crimes back into the US population. By reducing the number of illegal immigrants that ICE can hold overnight, it reduces their effectiveness and supports the democrat's new goal of eliminating that organization. President Trump had asked for funding for more beds so that many more criminals could be confined rather than released into the population.

Clearly logic and reason are not a requirement for political office. This hard to swallow compromise has conservatives everywhere up in arms late Monday and that is why the futures are falling. There is the potential for the president to turn it down since it is entirely contrary to what he has been proposing.

The market traded sideways on Monday with the China trade worries and the pending government shutdown weighing on the market. This is also expiration week and sometimes a turning point in February. Post earnings depression increases next week as the majority of earnings will be over. More than 400 S&P companies will have reported.

The S&P is failing just under the 200-day average at 2,742 and the consensus end of year target for the S&P at 2,750. Those could be difficult hurdles to cross without a China trade deal.


The Dow can't seem to get out of its own way and has traded sideway since the 31st. There was one strongly positive day but the rest of the time it was sideways. Boeing was responsible for more than 300 Dow points since Christmas and shares have cooled over the last three days because of the negative China news. Rally on one stock, crash on one stock.

The Dow is holding over the 25,000 level and using the 100, 200 and 300 day averages as support.



The Nasdaq is fighting to remain above the 7,300 level and correction territory at 7,298. The FANG stocks are weakening and that is always a killer for Nasdaq momentum.




The economic highlight for the week will be the Consumer Price Index on Wednesday followed by retail sales on Thursday. No inflation is expected, and the Fed should not have to reconsider its actions.


Akamai, Activision, Twilio, Under Armour and Shopify will be the earnings headliners for Tuesday. Three big techs report later in the week with Cisco, Applied Materials and Nvidia. This is generally thought of as the end of the Q4 earnings cycle but there will still be several hundred stocks reporting over the next four weeks. The pace slows significantly, and market excitement slows at the same time.


I would continue to be cautious about adding new longs. While we could always watch the market climb a wall of worry into March in hopes of a China trade deal, there is always risk that the negative earnings forecasts will suddenly become important.

The market does not need a reason to decline but it will take advantage of any reason that appears. I continued to profile long positions this week because the trend is our friend until it ends. If the budget compromise occurs and a China trade deal appears, we could add a couple hundred S&P points rather quickly. I would recommend selling any post China rally when it peaks.

Enter passively and exit aggressively!

Jim Brown

Send Jim an email



NEW DIRECTIONAL Call PLAY

ADP - Automatic Data Processing - Company Profile

Automatic Data Processing, Inc. provides business process outsourcing services worldwide. It operates through two segments, Employer Services and Professional Employer Organization (PEO) Services. The Employer Services segment offers various human resources (HR) outsourcing and technology-based human capital management solutions. Its offerings include payroll, benefits administration, talent management, HR management, time and attendance management, insurance, retirement, and compliance services. This segment provides a range of solutions, which businesses of various types and sizes can use to activate talent, as well as recruit, pay, manage, and retain their workforce. It serves approximately 630,000 clients through its cloud-based strategic software as a service offering. The PEO Services segment provides HR outsourcing solutions through a co-employment model. This segment offers HR administration services, including employee recruitment, payroll and tax administration, time and attendance management, benefits administration, employee training and development, online HR management tools, and employee leave administration. It also provides employee benefits that enable eligible worksite employees with access to a 401(k) retirement savings plan, health savings accounts, flexible spending accounts, group term life and disability coverage, and an employee assistance program, as well as group health, dental, and vision coverage. In addition, this segment offers employer liability management services comprising workers' compensation program, unemployment claims management, safety compliance guidance and access to safety training, access to employment practices liability insurance, and guidance on compliance with the United States federal, state, and local employment laws and regulations. The company was founded in 1949 and is headquartered in Roseland, New Jersey. Company description from FinViz.com.

ADP is simply a solid company. However, they are not flashy or sexy as an investment. They just perform but they do tend to react to the Dow's movement. However, recently they have outperformed the Dow as they approach new highs. They raised earnings guidance for 2019 from 18-20% growth to 20-22%.

Interest on funds held for clients rose 21%. Average client balances rose 5% to $23.6 billion.

Earnings May 1st.

They have rebounded back strongly from the December market crash and are approaching resistance at $148 and again at $152. However, all the indicators suggest the stock will succeed in making a new high, market permitting.

There are only 32 days left in the March options, so we need to reach out to the May cycle. There are no April options at this time. I am recommending a combination position to offset the high option prices.

Buy May $150 call, currently $5.20, stop loss $142.65.
Optional: sell short May $135 put, currently $2.20, stop loss $142.65.

If you do not want to add the short put you could look at using the $155 call instead at $3.20.



IWM - Russell 2000 ETF - ETF Description

The iShares Russell 2000 ETF seeks to track the investment results of an index composed of small-capitalization U.S. equities. Specifically, the Russell 2000 Index. The Russell is heavily weighted in Financials, Health Care, Industrials, Information Technology and Consumer Discretionary.


The Russell showed bullish relative strength on Monday with a 12 point gain of almost 1% while the big cap indexes were mixed. Normally, in bullish markets, the small cap stocks lead. Fund managers and investors buy the small caps to get more bang for their bucks than putting money in big cap stocks with billions of shares outstanding.

The Russell closed only 1 point below a two-month high. If the government is not going to be shut down and there will eventually be a China trade deal, the small caps should rally sharply.

Buy May $155 Call, currently $3.34, stop loss $147.75.
Optional: Sell short May $140 Put, currently $1.98, stop loss $147.75.
Net debit $1.36.




Current Portfolio


Open Positions

Check the graphic below for any new stop losses in bright yellow. We need to always be prepared for an unexpected decline. Any items shaded in blue were previously closed.




Current Position Changes


ITW - Illinois Tool Works
The long position was entered at the open on Tuesday.

VXXB - Vix Futures ETN
The short position was entered at the open on Tuesday.

CAT - Caterpillar
The long position was stopped at $129.85.

COST - Costco
The long position was stopped at $206.85.

CRM - SalesForce.com
The long position was stopped at $156.25.


Original Play Recommendations (Alpha by Symbol)


BOX - Box Inc - Company Profile

Comments:

Goldman initiated coverage with a buy rating and shares shot up to $23.50 and have held there for a week. No other news.

Original Trade Description: Jan 21st

Box, Inc. provides cloud content management platform that enables organizations of various sizes to manage and share their enterprise content from anywhere or any device. The company's Software-as-a-Service platform enables users to collaborate on content internally and with external parties, automate content-driven business processes, develop custom applications, and implement data protection, security, and compliance features. Box, Inc. offers its solution in 23 languages. It serves healthcare and life sciences, financial services, legal services, media and entertainment, retail, education, and energy industries, as well as government sector primarily in the United States. The company was formerly known as Box.net, Inc. and changed its name to Box, Inc. in November 2011. Box, Inc. was founded in 2005 and is headquartered in Redwood City, California. Company description from FinViz.com.

Earnings February 27th.

Box is a provider of cloud content management services to enterprise customers. Procter & Gamble and GE are two of its largest customers. Over the last several weeks there has been a persistent rumor they will be acquired. Google has been a rumored acquirer but it is more likely Microsoft or even Hewlett Packard could be interested.

Entering a position on acquisition rumors is rarely a good move. More than 90% of the time nothing happens. In this case revenue is growing in excess of 25% for 2018 and they guided for 20%+ for 2019. They also guided for their first quarterly profit in Q4 since they went public in 2015.

Their customer retention rate is close to 100% and they had more than 90,000 customers at the end of Q3. Box has enough scale that it makes sense to be acquired rather than a large company trying to replicate their product and service and spend years stealing market share. Buying Box now would be an instant add on to profits.

Shares closed at a 4-month high on Monday in a bad market. The saucer base is complete and shares are rebounding.

Because of the potential earnings volatility in the market I am going to stay short term with cheaper options and less risk. I am recommending March but the June options are only slightly more expensive and twice the time.

Position 1/29/19:
Long March $21 Call @ $1.15, see portfolio graphic for stop loss.



CAT - Caterpillar - Company Profile

Comments:

Our luck ran out when the China trade news turned negative on Thursday. Shares were holding about $2.50 OTM and one good day would have inflated the option ahead of expiration. Instead the news caused a sharp drop and stopped us out for a loss.

Original Trade Description: Jan 7th

Caterpillar Inc. manufactures and sells construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives for heavy and general construction, rental, quarry, aggregate, mining, waste, material handling, oil and gas, power generation, marine, rail, and industrial markets. Its Construction Industries segment offers backhoe, compact, track-type, small and medium wheel, knuckleboom, and skid steer loaders; small and medium track-type, and site prep tractors; mini, wheel, forestry, small, medium, and large track excavators; and motorgraders, pipelayers, telehandlers, cold planers, asphalt pavers, compactors, road reclaimers, and wheel and track skidders and feller bunchers. The company's Resource Industries segment provides electric rope and hydraulic shovel, landfill and soil compactor, dragline, large wheel loader, machinery component, track and rotary drill, electronics and control system, work tool, hard rock vehicle and continuous mining system, scoop and hauler, wheel tractor scraper, large track-type tractor, and wheel dozer products; longwall, highwall, and continuous miners; and mining, off-highway, and articulated trucks. Its Energy & Transportation segment offers reciprocating engine powered generator set and engine, integrated system, turbine, centrifugal gas compressor, diesel-electric locomotive and component, and other rail-related products and services. The company's Financial Products segment offers finance for Caterpillar equipment, machinery, and engines, as well as dealers; property, casualty, life, accident, and health insurance; and insurance brokerage services, as well as purchases short-term trade receivables. Its All Other operating segments provides parts distribution and digital investments services. The company was formerly known as Caterpillar Tractor Co. and changed its name to Caterpillar Inc. in 1986. Company description from FinViz.com.

For Q3, they reported a 47% increase in profits but that was not good enough. In Q1 earnings rose 99% and 120% in Q2. Expectations were high. Earnings per share were $2.86, up from $1.95 but just barely over estimates for $2.85. The company affirmed their full year guidance of $11-$12 saying nothing had changed since the last quarter. That should be good news. Any changes would have been expected to be negative. They said the China market remained healthy and produced a 40% rise in excavators in 2018. They previously guided for a $100-$200 million hit from tariffs and said with the year 75% over it looked like the impact would be at the lower end of the range.

In any normal period, a 47% increase in profits would be outstanding. Given the sharply declining market and the dumping of anything related to China and tariffs, CAT shares were crushed.

In late November CAT said the three-month rolling sales growth for the October quarter rose 18%. That was still good but down from the 21% in September. Total industry sales rose 46% after a 47% rise in September and 35% in August. Energy and transportation retail sales were up 7%, with oil and gas up 20%. The report showed some slight moderation, but it was still a good month despite the tariffs.

With the Chinese trade talks accelerating the odds of a deal are improving. The Chinese Vice Premier showed up unexpectedly at Monday's talks signifying China's interest in actually doing a deal.

Earnings are January 24th. ANY positive news on China will cause this stock to rocket. I am proposing a short term call and then decide ahead of earnings if we want to hold over.

Update 1/28: CAT reported earnings of $2.55 that missed estimates for $2.98. That was the biggest quarterly earnings miss in over a decade. However, it was still an improvement from the $2.16 in the year ago quarter. This was the first earnings miss in ten quarters. Revenue of $14.34 billion also missed estimates but was up from $12.90 in the year ago quarter. The guided for 2019 to earnings of $11.75-$12.75 and analysts were expecting $12.73.

They blamed a slowdown in China's economy and the trade tariffs for the earnings miss.

Here are our options. This is a February call with three weeks until expiration. I do not expect it to return to $135 again. However, with the China trade talks later this week we could get some positive headlines that could lift the stock. Just bringing it back to $130 would inflate the option price. This may be wishful thinking but with a 73-cent premium, we either close now or hold a week and see if the situation improves. The risk is that the 73-cent premium becomes 43 cents. The reward is that maybe it rises to $2 or more on a trade deal. I am recommending we hold it until next week then decide.

Position 1/8/19:
Closed 2/7: Long Feb $135 Call @ $3.52, exit .54, -2.98 loss.



COST - Costco - Company Profile

Comments:

Costco reported their January sales and missed estimates. Same store sales rose 5.2% but missed the 6.0% estimate Core comps rose 7.0% excluding fuel and currency headwinds. E-commerce sales rose 24%. Traffic rose 4.9% in the US and 5.1% worldwide. Those are great numbers.

Unfortunately, the stock dipped on the news to stop us out at $206.85.

Original Trade Description: Jan 14th

Costco Wholesale Corporation, together with its subsidiaries, operates membership warehouses. It offers branded and private-label products in a range of merchandise categories. The company provides dry and packaged foods, and groceries; snack foods, candies, alcoholic and nonalcoholic beverages, and cleaning supplies; appliances, electronics, health and beauty aids, hardware, and garden and patio products; meat, bakery, deli, and produces; and apparel and small appliances. It also operates gas stations, pharmacies, optical dispensing centers, food courts, and hearing-aid centers; and engages in the travel business. In addition, the company provides gold star individual and business membership services. As of September 2, 2018, it operated 762 membership warehouses, including 527 warehouses in the United States, 100 in Canada, 39 in Mexico, 28 in the United Kingdom, 26 in Japan, 15 in Korea, 13 in Taiwan, 10 in Australia, 2 in Spain, 1 in Iceland, and 1 in France. Further, the company sells its products through online. The company was formerly known as Costco Companies, Inc. Costco Wholesale Corporation was founded in 1976 and is based in Issaquah, Washington. Company description from FinViz.com

Everyone should know by now that Amazon and Costco are not competitors. They do sell some of the same items, but Amazon is not a threat. Costco is Amazon proof. If anything, they are becoming more of a threat to Amazon because their online business is growing rapidly.

For December, Costco reported sales of $15.42 billion a 7.8% increase over the year ago quarter. For the quarter ended on January 6th sales rose 9.5% to $52.99. Same store sales rose 7.5% in the US and 6.1% globally. Ecommerce sales rose 13.6%. For the quarter US same store sales rose 10.0%, globally 7.9% and Ecommerce 27.9%. These are dynamite numbers and show no weakness when other retailers are floundering.

Earnings are March 6th.

Shares are recovering from a monster crash in December. I am going to recommend an April call because there are no March options at this time. We will exit before their earnings. Having the expiration after earnings will retain premium until after earnings. Decay should be minimal.

Update 1/28: Costco announced a quarterly dividend of 57 cents payable February 22nd to holders on February 8th.

Position 1/15/19:
Closed 2/7: Long April $220 call @ $5.35, exit 2.87, -2.48 loss.



CRM - SalesForce.com - Company Profile

Comments:

No specific news. Shares cratered with the market on Wednesday to stop us out then rebounded to close back at prior highs.

Original Trade Description: Dec 10th.

SalesForce.com, inc. develops enterprise cloud computing solutions with a focus on customer relationship management. The company offers Sales Cloud to store data, monitor leads and progress, forecast opportunities, and gain insights through analytics and relationship intelligence, as well as deliver quotes, contracts, and invoices. It also provides Service Cloud, which enables companies to deliver personalized customer service and support, as well as a field service solution that enables companies to connect agents, dispatchers, and mobile employees through a centralized platform, which helps to schedule and dispatch work, and track and manage jobs in real-time. In addition, the company offers Marketing Cloud to plan, personalize, and optimize one-to-one customer marketing interactions; Commerce Cloud, which enables companies to enhance engagement, conversion, revenue, and loyalty from their customers; and Community Cloud that enables companies to create and manage branded digital destinations for customers, partners, and employees. Further, it provides Quip collaboration platform, which combines documents, spreadsheets, apps, and chat with live CRM data; Salesforce Platform for building enterprise apps, as well as artificial intelligence (AI), no-code, low-code, and code development and integration services, including Trailhead, Einstein AI, Lightning, Internet of Things, Heroku, Analytics, and AppExchange; and solutions for financial services, healthcare, and government. Additionally, the company offers cloud services, such as consulting and implementation services; training services, including instructor-led and online courses; and support and adoption programs. It provides its services through direct sales; and consulting firms, systems integrators, and other partners. salesforce.com, inc. has a partnership with Apple Inc. to develop customer relationship management platform. The company was founded in 1999 and is headquartered in San Francisco, California. Company description from FinViz.com

When the market is weak, go with strength. CRM shares rallied on the strong earnings then pulled back only slightly during the latest Nasdaq crash. The Nasdaq was the strongest index on Monday and hopefully we are nearing an actual bottom. With CRM shares showing relative strength, this may be a safe port in a volatility storm.

SalesForce.com reported earnings of 61 cents that beat estimates for 50 cents and the year ago quarter of 39 cents. Revenue rose 26% to $3.39 billion and beat estimates for $3.37 billion. The company guided for revenue as much as $3.56 billion in Q4 and analysts were expecting $3.53 billion. They said they were on path for $16 billion in revenue in 2020 and $22 billion by 2022.

Billings, metric of future performance, rose 27% to $2.89 billion and beat estimates for $2.68 billion. Revenues rose 25% in the Americas, 26% in APAC and 31% in EMEA using constant currency. Sales cloud revenues rose 11%, service cloud rose 24% and marketing and commerce cloud rose 37%. Platform and "other" cloud revenues rose 51% or 30% if you exclude the acquisition of Mulesoft. The number of deals for more than $1 million rose 46%.

Adjusted gross profit of $2.6 billion came from gross margin of 76.9%. They ended the quarter with $3.45 billion in cash.

This company can seemingly do no wrong. When the tech sector eventually recovers SalesForce will be a leader.

Position 1/8/19:
Closed 2/6: Long Feb $150 call @ $4.50, exit $7.05, +$2.55 gain.

Position 12/11/18:
Previously closed 12/20: Long Feb $150 call @ $4.40, exit $1.54, -2.86 loss.



ITW - Illinois Tool Works - Company Profile

Comments:

No specific news. Shares down with the market on the China trade news.

Original Trade Description: Feb 4th

Illinois Tool Works Inc. manufactures and sells industrial products and equipment worldwide. It operates through seven segments: Automotive OEM; Food Equipment; Test & Measurement and Electronics; Welding; Polymers & Fluids; Construction Products; and Specialty Products. The Automotive OEM segment offers plastic and metal components, fasteners, and assemblies for automobiles, light trucks, and other industrial uses. The Food Equipment segment produces warewashing, cooking, refrigeration, and food processing equipment; kitchen exhaust, ventilation, and pollution control systems; and food equipment, maintenance, and repair services. The Test & Measurement and Electronics segment produces equipment, consumables, and related software for testing and measuring of materials and structures, as well as equipment and consumables used in the production of electronic subassemblies and microelectronics. The Welding segment produces arc welding equipment; metal arc welding consumables and related accessories; and metal jacketing and other insulation products for various industrial and commercial applications. The Polymers & Fluids segment produces adhesives, sealants, lubrication and cutting fluids, and fluids and polymers for auto aftermarket maintenance and appearance. The Construction Products segment produces engineered fastening systems and solutions for the residential construction, renovation/remodel, and commercial construction markets. The Specialty Products segment offers beverage packaging equipment and consumables, product coding and marking equipment and consumables, and appliance components and fasteners. It serves the food and beverage, consumer durables, general industrial, printing and publishing, and industrial capital goods markets. The company distributes its products directly to industrial manufacturers, as well as through independent distributors. Illinois Tool Works Inc. was founded in 1912 and is headquartered in Glenview, Illinois. Company description from FinViz.com.

ITW reported Q4 earnings of $1.83 that beat estimates for $1.82. Revenue of $3.6 billion matched estimates. They guided for 2019 for earnings of $7.90-$8.20. For Q1 they expect $1.73-$1.83. Analysts were expecting $8.02 and $1.94.

However, the rest of the story is that ITW guidance included restructuring costs of 7 cents, forex headwinds of 7 cents and tax charge of 5 cents. That is 19 cents in addition to their estimate making the guidance above the street. Investors did not read through the news and shares fell sharply on Friday. After the news was disseminated shares rebounded $4 today and will probably continue rebounding.

ITW also has a $4 dividend giving them a 2.89% yield. With S&P earnings likely to decline in Q1, these big dividend stocks are going to be in favor.

Position 2/5:
Long June $145 Call @ $3.70, see portfolio graphic for stop loss.



TITN - Titan Machinery - Company Profile

Comments:

Titan closed at a 7-month high on Thursday then pulled back slightly.

No specific news.

Original Trade Description: Jan 21st

Titan Machinery Inc. owns and operates a network of full-service agricultural and construction equipment stores. It operates through three segments: Agriculture, Construction, and International. The company sells new and used equipment, including agricultural and construction equipment manufactured under the CNH family of brands, as well as equipment from various other manufacturers. Its agricultural equipment comprise tractors, combines and attachments, application equipment and sprayers, planting and seeding equipment, tillage equipment, hay and forage equipment, and precision farming technology and related equipment for use in the production of food, fiber, feed grain, and renewable energy; and home and garden applications, as well as maintenance of commercial, residential, and government properties. The company's construction equipment includes compact track loaders, compaction equipment, cranes, crawler dozers, excavators, forklifts, loader/backhoes, loader/tool carriers, motor graders, skid steer loaders, telehandlers, and wheel loaders for commercial and residential construction, road and highway construction machinery, and mining operations equipment. It also sells maintenance and replacement parts. In addition, the company offers repair and maintenance services that include warranty repairs, on-site and off-site repair services, and scheduling off-season maintenance services, as well as notifies customers of periodic service requirements; provides training programs to customers; and sells extended warranty services. Further, it rents equipment; and provides ancillary equipment support services. The company operates in North Dakota, South Dakota, Iowa, Minnesota, Montana, Nebraska, Wyoming, Wisconsin, Colorado, Arizona, and New Mexico, the United States; and Romania, Bulgaria, Serbia, and Ukraine, Europe. Titan Machinery Inc. was founded in 1980 and is headquartered in West Fargo, North Dakota. Company description from FinViz.com

Think of Titan equipment as the poor man's Caterpillar. They are a fraction of the size of Caterpillar but their prices are reasonable compared to the yellow metal giant.

They reported Q3 earnings of 49 cents compared to analyst estimates for 36 cents. Earnings rose 400% over the year ago quarter. Revenue of $363.6 million rose 10% and edged out estimates at $360 million.

They guided for similar sales in Q4 but raised their margin guidance from 8.7%-9.2% to 9.1%-9.4%. They guided for earnings of 65-75 cents. Consensus estimates are well below that level.

Shares have rebounded sharply from the December market crash and are right on the verge of breaking out to an 8-month high. Given their recent gain I would normally not recommend them but with the outlook on China improving and the market in rally mode, I am going to buy the breakout. Options are cheap.

Earnings February 28th.

Position 1/22/19:
Long March $20 call @ 55 cents, see portfolio graphic for stop loss.



BEARISH Play Updates

VXXB - Barclays VIX Futures ETN - ETN Description

Comments:

The China trade news on Thursday caused a big spike in volume but the ETN is fading back to the lows. With a big gap higher open on Tuesday, we could be back under 32 or even 30 by the weekend.

Original Trade Description: Feb 4th.

The investment seeks return linked to the performance of the S&P 500 VIX Short-Term Futures Index TR. The ETN offers exposure to futures contracts of specified maturities on the VIX index and not direct exposure to the VIX index or its spot level. The index is designed to provide investors with exposure to one or more maturities of futures contracts on the CBOE Volatility Index. Company description from FinViz.com.

The VXXB is a short-term volatility ETN based on the VIX futures. As a futures product it has the rollover curse. Every time they roll to a new futures contract, they have to pay a premium and that lowers the price of the ETN. It is a flawed product with a perpetual decline built in from the monthly roll over in the futures contracts.

As evidence of this flaw, the prior VXX ETN had done five 1:4 reverse stock splits. The last five reverse splits occurred at $13.11 (11/2010), $8.77 (10/2012), $12.84 (11/2013), $9.52 (8/8/16), $12.77 (8/22/17). The prospectus says it can reverse split anytime it trades under $25 for a prolonged period and the splits will always be 1:4.

We know from experience that the VXXB and its predecessor the VXX always decline long term.

Unfortunately, put options are expensive with a volatility instrument at this price level. The only recommendation is to short the ETN and forget it. This will be a long-term position. This is not a 2-3 week play. I can guarantee you, if history holds, we can play this until it splits 1:4 again at $10. Once we are in the position and profitable, I may put a trailing stop loss on it. We will take profits and then look for a bounce to get back in. We could keep this play in the portfolio on a trading basis permanently.

The VXXB will be hard to short. The shares are out there and being traded because the volume on Monday was 18.5 million. You have to tell your broker you really want to short it and make them find the shares. Sometimes it takes days or even a week before your broker will find you the shares. Trust me, be persistent and it will be worth the effort.

Position 2/5/19:
Short VXXB shares @ $33.70, see portfolio graphic for stop loss.



Prices Quoted in Newsletter

At Option Investor, we have a long-standing policy prohibiting the editors and staff from actually trading the individual recommendations in order to conform to SEC rules concerning trades.

The prices quoted in the newsletter are the end of day prices in most cases.

When discussing fills or stops the prices quoted are the bid/ask at the time the entry trigger or exit stop is hit. This is NOT a price that someone on staff actually got using a live order.

For entry/exit points at the market open the prices quoted will be the opening print. The majority of the time readers are able to get a better fill than the opening print because of market maker bias at the open.

For trades with an opening qualification the prices quoted will be the bid/ask at the time the qualification was met.

All of these rules normally produce worse prices than an active trader would normally get. Because they are standardized there may be some cases where a price quoted was better than an actual fill. If you received a price that was dramatically different than what was quoted please let us know.