Good morning, tradersâŚ
Ben here.
The market is closed Thursday for Thanksgiving, which means we have just four trading days to work with.
Iâve seen four day trading weeks go a few different waysâŚ
Sometimes, as traders head off for family gatherings, the volume gets dryer than your grandmaâs turkey, leaving the price action quieter than usual.
Other times, with the right catalysts, the limited time frame can kick market momentum into overdrive.
And based on what we saw on Monday, with strong moves in retail and financials, I think this week will be in the latter category.
A shortened week might not sound like a big deal, but itâs about being prepared for a slightly different trading environmentâŚ
With less time on the clock, your choice of contracts, entries, and exits matter even more â especially in the options market, where timing is everything.
So, letâs break down three critical factors to keep in mind as we navigate this shortened trading week. Letâs make these four days countâŚ
Focus on the Best Setups Only
If youâre trying to track too many trade opportunities simultaneously, you risk missing the ones that matter most.
For most traders, this means having no more than two or three charts up at a time.
Our brains can only pay attention to so many things at once.
Even if you have eight screens, you can only truly focus on one at a time.
Itâs like going to a theater and trying to watch three movies at once.
Worse yet, tracking too many charts, stocks, or positions simultaneously can lead to analysis paralysisâŚ
For traders, this means spending too much time researching, watching, and analyzing stocks without actually buying or selling anything.
Here’s what happens:
Information Overload: You gather a ton of data, news, and reports about a stockâŚ
Overthinking: You keep thinking about the pros and cons, trying to predict the perfect moment to tradeâŚ
Fear of Losing: Youâre afraid of making the wrong choice and losing moneyâŚ
No Action: Because of this fear and overthinking, you end up doing nothingâŚ
A vital part of being a great trader is having the skill to identify a perfect setup from a false breakout or pullback.
Then, you should zero in on one (or a few) âplays of the dayâ and tune out everything else.
Be Careful With Weekly Contracts
As I mentioned earlier, options trading is all about timingâŚ
And in a four-day trading week, you need to be especially cautious about the timing of your trades.
The weekly options contracts expiring this Friday, November 29 have one less day to realize their price targets than they would during a normal week.
Be careful trading these because poor timing can ruin an otherwise ideal setup.
If youâre trading stocks without leverage, you probably arenât gonna lose more than 10-20% on your worst day (unless youâre scalping sketchy penny stocks).
But if youâre trading weekly options and the underlying stock moves just a few percentage points in the wrong direction, your contracts could lose more than 50% of their value.
And this week, the time decay will be faster and more unforgiving.
Now, this doesnât mean you canât trade weeklies whatsoever. In fact, I bought some weekly contracts Monday morning on Target Corp. (NYSE: TGT) and Kohlâs Corp. (NYSE: KSS):
But notice I mentioned these are risky trades. Iâm keeping them on a short leash.
So, if you do enter any weekly options, make sure the setup checks all your boxes â and stay disciplined with your scale-outs and stop losses.
Leave Last Week in the Past
Some traders tend to let the sting of their losses â or the confidence from their wins â carry over into the following week.
But in this short week of trading, I want you to avoid bringing past emotions (or any emotions, for that matter) into the present.
Now, that doesnât mean you should forget about valuable lessons youâve learned from your past trades. Iâm not saying thatâŚ
Iâm simply suggesting that you start the week with a fresh outlook, unaffected by the feelings that prior trades have brought you.
If youâre walking on eggshells because of a brutal loss in the recent past, you may lack the confidence to pull the trigger when a perfect setup comes across your screen.
That said, overconfidence can also be a traderâs worst enemyâŚ
If a string of lucky wins makes you feel invincible, you may overtrade or oversize your positions.
All this to say, donât let your recent results affect your decision-making this week.
Every month, every week, and every day is a clean slate in the market.
Treat it as such.
Now, before we go, letâs look at:
đ°The Biggest Smart-Money Bets of the Dayđ°
- $6.4 million bullish bet on WMT 12/20/2024 $86.67 calls @ $3.45 avg. (seen on 11/25)
- $3.9 million bullish bet on PCOR 12/20/2024 $75 calls @ $5.20 avg. (seen on 11/25)
- $3.2 million bullish bet on XLB 12/20/2024 $95 calls @ $1.63 avg. (seen on 11/25)
Happy trading,
Ben Sturgill
P.S. TODAY, November 26 at 1:00 p.m. EST, Danny Phee and I are hosting a LIVE WORKSHOP to go over the best options-trading setups for this 4-day trading weekâŚ
Iâm excited to see you there â Click here to reserve your spot now!
*Past performance does not indicate future results
