“Armchair Trader Series” Recommendations
- Week Beginning -
Monday, February 24, 2020

by Ian Harvey

IMPORTANT NOTE: This is a recommendation and individual members can use their own discretion as to when to enter or exit!

You may also wish to read Stock Options Made Easy Trading Philosophy

ALSO

"Trading Capital Management"



The Sell-Off!

Global financial markets plunged for the sixth consecutive day on yesterday due to coronavirus fears. All major US equity indexes entered correction territory, which indicates they've fallen more than 10% from recent highs.

Here's how major US indexes closed on Thursday:

  • S&P 500: -4.43%
  • Dow Jones Industrial Average: -4.42% (1,191 points)
  • Nasdaq composite: -4.61%

“Global markets were down $1.83 trillion today, with the U.S. down $1.33 trillion,” S&P Dow Jones’ Howard Silverblatt said in an email. He added that over the past six days, global markets erased $6 trillion in wealth with U.S. markets losing $4 trillion.

Fears sparked by the outbreak of the infectious disease that originated in Wuhan, China late last year, is putting one of the oldest stock-market gauges on pace for its worst weekly skids on record.

Thursday’s slide represents the Dow’s quickest decline into correction from a record close, since the nine trading sessions ended Feb. 8, 2018.

It also would rank as one of the worst weeks for the other benchmarks too. With the S&P 500 SPX, -4.42%  and the Nasdaq Composite Index COMP, -4.61%  headed for their worst weeks since the 2008 financial crisis, when markets were rocked by the creation of complex mortgage securities that spread across the globe.

This time the spread of the new coronavirus, a family of viruses similar to SARS, or severe acute respiratory syndrome, has injected a level of complexity into markets that is unsettling what had been predominantly bullish sentiment on Wall Street.

The S&P 500 index’s 10.8% weekly decline also puts it at among the 20 worst weekly slumps for the index thus far.

Meanwhile, the Nasdaq Composite is on pace for a weekly decline off 10.55%, which would rank this week’s drop as the 7th worst of its nearly 50-year history, with a decline of 25.3% ended April 13, 2000, representing its worst weekly skid.

At Present…..

…..I had informed you earlier this week that we would not participate in further trading until we saw how the markets panned out.

After Monday’s drubbing, according to my article, Coronavirus and The Stock Market!,” I was hoping that the market (I mean traders and investors) would gain some sense of balance – this was not to be.

Therefore, let us move with the tide and jump into some option put trades!


Option Trade – Microsoft Corporation (NASDAQ:MSFT) PUTS

Friday, February 28, 2020

** OPTION TRADE: Buy the MSFT MAR 20 2020 150.000 PUTS at approximately $4.30.

Place a pre-determined sell at $8.60.

Include a protective stop loss of $1.75.

Services-provider company Microsoft Corporation (NASDAQ:MSFT), the tech titan, saw its shares fall by 7.05% at close yesterday, to finish at $158.18, after warning that the coronavirus outbreak would negatively impact its Windows PC business.

Pre-market, today, the stock is at $154.26, down another 2.48%. Obviously this will change again by the time the market opens.

Late Wednesday, Microsoft said it likely will miss its sales guidance for the current quarter in its Windows PC unit. Windows software and Surface computer sales have been "more negatively impacted than previously anticipated," it said in a news release.

On Jan. 29, Microsoft issued fiscal third-quarter sales guidance for its More Personal Computing segment of $10.75 billion to $11.15 billion. That guidance range was wider than usual "to reflect uncertainty related to the public health situation in China."

"Although we see strong Windows demand in line with our expectations, the supply chain is returning to normal operations at a slower pace than anticipated at the time of our Q2 earnings call," Microsoft said.

In the December quarter, Microsoft's More Personal Computing segment accounted for 35.8% of the company's total revenue.

IDC Report…..

Also Thursday, market research firm IDC lowered its 2020 forecast for personal computer sales in part because of the Covid-19 coronavirus outbreak. It sees shipments of personal computing devices falling 9% to 374.2 million units in 2020. Its forecast includes desktop PCs, notebooks, workstations and tablets. IDC previously forecast a decline of 6.8% this year.

IDC cited two significant factors for the expected PC shipment decline this year….

  • First, the transition from Windows 7 to Windows 10 lifted PC sales last year and creates tougher year-over-year growth comparisons.
  • Second, the spread of Covid-19 is hampering PC supply and possibly demand.

"We expect the road to recovery for China's supply chain to be long, with a slow trickle of labor back to factories in impacted provinces until May when the weather improves," IDC analyst Linn Huang said in a news release. "Many critical components such as panels, touch sensors, and printed circuit boards come out of these impacted regions, which will cause a supply crunch heading into Q2."

So.....

Without going into any more detail – as I believe the market situation speaks for itself – I suggest entering this OPTION PUT at best and monitor for an exit when appropriate – or alternatively follow the recommended exit lines.


Option Trade – UPDATE

Wednesday, February 26, 2020

By Ian Harvey

 

As you would be aware the stock market has taken a beating for the past 4 trading sessions.

I had expected the market to perform better yesterday – and the day started out quite well - but with warnings from the Center for Disease Control the day deteriorated quite quickly.

Before I send out any more trades let us check today’s progress.

Meantime, if you haven’t read the articles from the newsletter, click on the links below…..

Coronavirus and The Stock Market!

COVID-19 Causes The Stock Market To Continue Its Meltdown!

 

"Success is simple. Do what's right, the right way, at the right time.”

Option Tip for your Success!

Options traders are not successful because they win.

Options traders win because they are successful.

Sincerely,       

Ian Harvey

(Director of Stock-Options-Made-Easy)