Trade Idea Examples From The Options Trading Showdown

Trade Idea Examples From The Options Trading Showdown With Marc Chaikin And Tom Sosnoff

A great trade idea is not always easy to come by. However, that was the topic of a recent live webinar hosted by two trading legends.

On May 21st, Marc Chaikin (creator of Chaikin Money Flow and Founder of Chaikin Analytics) and Tom Sosnoff (founder of tastytrade) co-hosted the first-ever “Options Trading Showdown.” These two experts went head-to-head, live, on how they would trade some of the most popular stocks. Marc shared his strategies using the Chaikin Analytics method and platform, and Tom Sosnoff shared his own strategy. The two methods clearly complimented each other well.

Hundreds of traders watched this event live. Didn’t get a chance to make it? Here’s a quick roundup of just four trade idea examples they highlighted during the event. Watch the full replay video for even more trade ideas.

Trade Idea #1: Pairs Trade with Paypal and Square Inc.

One of the first trading ideas covered by Marc Chaikin and Tom Sosnoff was a potential pairs trade with Paypal and Square, two similar digital payment companies.

As Marc demonstrated, Paypal showed a Bullish Chaikin Power Gauge stock rating.

What does that mean? 

The Chaikin Power Gauge stock rating combines twenty of the most important factors affecting a stock’s price movement into a simple rating. It’s remarkably accurate at identifying stocks likely to outperform or underperform the market over the next three to six months (and it tells you why).

trade idea

Referring to Paypal, Marc said, “The stock’s been a powerful performer, the institutions (the smart money) have been accumulating it, but it’s really since late April . . . that all three of our approaches to the market lined up, and then we got this Oversold Buy Signal.” An Oversold Buy Signal is a proprietary timing tool only available in Chaikin Analytics.

Based on all of these Bullish indications, Marc identified Paypal as a “potential long.” Next, he used the Chaikin Stock Discovery Engine, to find a potential “pair” with Paypal. The Chaikin Stock Discovery Engine is a tool only found in Chaikin Analytics that finds similar stock ideas to any stock you input. That’s where he discovered Square Inc. listed as a “Similar Short Sale Candidate” and saw the opportunity for a pairs trade using Paypal and Square.

Watch the clip below to hear Marc Chaikin and Tom Sosnoff break down why exactly why these two stocks could be potential pairs trade candidates, and how they would set up the trade.

Trade Idea #2: Haliburton Put

Another trade idea these experts covered was a potential Haliburton put. Marc explained why Haliburton is showing all the signs of a Classic Chaikin Bear. As Marc explained, “We read the chart from the bottom up. The Power Gauge Rating has been Bearish for a year . . . it has been underperforming the market since last April. There’s your combination of fundamentals and technicals.”

Marc also likes to look at what the “smart money” is doing in regards to the stock, which he reads through the Chaikin Money Flow indicator. In this case, Chaikin Money Flow showed that the “smart money” has been selling on rallies.

On top of this, Marc pointed out that the stock triggered a Relative Strength Sell Signal in Chaikin Analytics (this is a proprietary Chaikin Analytics tool). This Sell Signal told Marc that now could be a good time to execute the trade.

Watch the clip below for the full explanation from Marc Chaikin.

Trade Idea #3: Nordstrom At The Money Put

The next trade idea covered in “The Options Trading Showdown” is a potential Nordstrom Put.

“Why did I buy an outright put on Nordstrom that expires on Friday? Well, look at the chart from the bottom up. The Chaikin Power Gauge has been Bearish since November. It’s underperforming the market, due to report earnings after the close today. I made what I call a ‘binary bet.’ We already had some very negative reports before the opening from Kohls, JC Penney. I knew that the reports from Nordstrom were probably not going to deviate that much from, say, Macy’s and Kohls, so I bought an ‘at the money put,’ the stock was at $37.00.”

As Marc Chaikin explained, this is how he was able to convert the directional edge from Chaikin Analytics into a profitable trade idea.

Watch the full clip below for the full explanation of how he developed and executed this at the money put with Nordstrom.

Trade Idea #4: Twitter Call Vertical Spread

Finally, Marc Chaikin and Tom Sosnoff covered a Twitter trade idea.

As Marc demonstrated on his screen, the Chaikin Power Gauge had a Bullish rating for Twitter and its Relative Strength Vs. the SPY was strong. Chaikin Money Flow was Bullish. These indicators are all part of the Chaikin methodology.

“I want to look at Twitter,” said Marc Chaikin. “Tom emailed me that this is one of the stocks where he thought there was a directional opportunity. I agree. Tom, my preferred trade here was to put on the 38-42 Bullish vertical call spread.”

Tom shared Marc’s view that there was a big opportunity here to play in the upside on Twitter.

Watch the clip below for the full explanation of this Twitter trade idea.

All in all, this was an event packed full of great expert-selected trade idea examples and trading wisdom. Be sure to watch the full video replay to hear everything Marc Chaikin and Tom Sosnoff had to say about trading Paypal, Square, Nordstrom, Haliburton, Twitter, and more.

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