Traders are getting a little nervous again as yields rise.
The fear is that higher interest rates will increase borrowing costs and prices, which could cool the economy too early in the recovery.
At this point, we want to remain conservative, but there aren’t enough fundamental changes to adjust our outlook.
Over the last 9-10 months, when traders start to fret about rising yields, the Federal Reserve has been willing to step in with new reassurances or additional monetary actions.
We can’t say for certainty they will do it again, but the odds seem pretty high. If that occurs, rates will drop and traders should calm down.
Although we want to be a little careful about our exposure to certain areas of the market, tech and services like Chegg (NYSE:CHGG) look great for new entries.
Do you have kids or grandkids in school? If so, you are already more than familiar with the frustrations around succeeding in a distance-learning environment.
We think that CHGG could help to turn that frustration into a profit opportunity. Chegg is the leader in U.S. based distance learning companies.
A cross between an online education company, social media firm and freelance consulting, Chegg has name awareness above even Amazon and Google for educational products and services among college-age adults.
Daily Chart of Chegg (CHGG) – Chart Source: TradingView
From a technical perspective, the stock has fallen below short-term support at about $102 over the past few days.
But that also means that the premiums on the put options we’re eyeing have increased, which should make for a very lucrative put-write.
To take advantage of this situation, we like the idea of selling a mid-March put option on CHGG with a strike price slightly below current levels.
On the date of publication, John Jagerson & Wade Hansen did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
John Jagerson & Wade Hansen are just two guys with a passion for helping investors gain confidence — and make bigger profits with options. In just 15 months, John & Wade achieved an amazing feat: 100 straight winners — making money on every single trade. If that sounds like a good strategy, go here to find out how they did it.