Strategic Trader Alert: GDP and Unemployment Reports Bring Back Some Volatility

There isn't any way to sugarcoat the gross domestic product (GDP) report from this morning, which showed the U.S. economy shrunk at an annualized rate of 32.9% in the second quarter of 2020.

ALERT Jul 30, 2020   GDP and Unemployment Reports Bring Back Some Volatility Dear Savio, There isn't any way to sugarcoat the gross domestic product (GDP) report from this morning, which showed the U.S. economy shrunk at an annualized rate of 32.9% in the second quarter of 2020. Although that was within the ballpark of most analysts' estimates, it was the worst decline since the 1940s, and it shook the markets a little this morning. To add insult to injury, the Department of Labor reported another 1.4 million new unemployment claims this week. Continuing claims for unemployment are a little over 17 million, which suggests we are unlikely to get any surprisingly good news next Friday when the monthly labor report is released. We have to emphasize that because traders and analysts expected the data to be very poor, this news is unlikely to send the market into a tailspin. However, the reality of the numbers has still reintroduced some volatility, which leads us to feel that a small adjustment to our recommendation list is appropriate. We recommend traders close the Microsoft (MSFT) short puts we sold on July 15 to take those profits off the table. To do so, you need to… Take profits and 'buy to close' the MSFT August 7th $200 Put Write (MSFT200807P00200000) at current market prices. This position was designed to profit from MSFT's earnings on July 22, but the stock has remained range-bound since then. Although that's not the best-case scenario, we have still done very well. By closing it temporarily, we will be able to avoid any damage if there is an "aftershock" from today's economic news heading into the weekend. We can use any drawdowns to re-enter the position at an even better price. For now, we suggest leaving the stock in your watchlist. We’ll likely open a new MSFT position soon. Long-Term Focused Strategic Position: Right now, we only recommend selling the following covered calls or covered puts if you are already holding the underlying stock. We are not recommending our long or short stock positions for new entries at this time. If you haven’t already entered the following and can still get in for a price at, or better than, our recommended minimum/maximum, we still recommend entering: Covered Call: (Short) BAC August 21st $25 Covered Call (BAC200821C00025000) for a minimum of $0.65. Covered Call: (Short) BLL August 21st $75 Covered Call (BLL200821C00075000) for a minimum of $2.00. Covered Call: (Short) CSCO July 31st $48.50 Covered Call (CSCO200731C00048500) for a minimum of $0.35. Covered Call: (Short) KO August  7th $47 Covered Call (KO200807C00047000) for a minimum of $0.75. Covered Call: (Short) NKE August 21st $100 Covered Call (NKE200821C00100000) for a minimum of $2.40. Put Write: (Short) SBUX August 21st $72.50 Put Write (SBUX200821P00072500) for a minimum of $0.70. Put Write: (Short) TGT August 21st $117 Put Write (TGT200821P00117000) for a minimum of $2.25. We are still holding the following strategic trades, but either the current value of the short option or the price action of the stock itself doesn't warrant entering a new trade at this time. If you haven't already entered these trades, we recommend waiting until further notice before opening a new position: Covered Stock: Ball Corporation (BLL) common stock -- part of the BLL covered call position. Covered Stock: Bank of America (BAC) common stock -- part of the BAC covered call position. Covered Stock: Cisco Systems (CSCO) common stock -- part of the CSCO covered call position. Covered Stock: Coca-Cola Company (KO) common stock -- part of the KO covered call position. Covered Stock: Nike (NKE) common stock -- part of the NKE covered call position. Short Stock: iShares Investment Grade Corporate Bond ETF (LQD) common stock for a minimum of $128.00. Short Stock: Wynn Resorts (WYNN) common stock for a minimum of $55.00. If put-writes and buy-writes are new strategies for you, be sure to check out our Resources page for more information. For more on these trades, be sure to attend our next weekly webinar Wednesday at 8 p.m. ET. Sincerely, John Jagerson and Wade Hansen Editors, Strategic Trader   This message was sent to the following e-mail account: ootlesoliginya.blogpost@blogger.com at Jul 30, 2020 12:31:25.117 Executive Editors: John Jagerson and S. Wade Hansen Editor-in-Chief: Luis Hernandez Marketing Director: Mary Southard Senior Managing Editor: David Tony Managing Editor: David Bowman Customer Service You can reach us at Feedback@InvestorPlace.com or by calling us at 800-219-8592. 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